<P> With the advent of computerised accounting, nostros and vostros just need to have opposite signs within any one bank's accounting system; that is, if a nostro in credit has a positive sign, then a vostro in credit must have a negative sign . This allows for a reconciliation by summing all accounts to zero (a trial balance)--the basic premise of double - entry bookkeeping . </P> <P> Nostro accounts are mostly commonly used for currency settlement, where a bank or other financial institution needs to hold balances in a currency other than its home accounting unit . </P> <P> For example: First National Bank of A does some transactions (loans, foreign exchange, etc .) in USD, but banks in A will only handle payments in AUD . So FNB of A opens a USD account at foreign bank Credit Mutuel de B, and instructs all counter-parties to settle transactions in USD at "account no . 123456 in name of FNBA, at CMB, X Branch". FNBA maintains its own records of that account, for reconciliation; this is its nostro account . CMB's record of the same account is the vostro account . </P> <P> Now, FNBA sells AUD1, 000,000 to C (a counterparty who has an AUD account with FNBA, and a USD account with CMB) for a net consideration of USD2, 000,000 . FNBA will make the following entries in its own accounting system: </P>

What is nostro and vostro account with example