GLOSSARY
Correspondent Banking
The chain of bilateral bank-to-bank relationships that moves money across borders. Each cross-border wire passes through one or more correspondents, each deducting fees and applying its own compliance checks.
Correspondent banking is the system that lets a bank in one country settle payments in a currency it doesn't directly clear. Bank A holds an account ("nostro") with Bank B in Bank B's home market; B holds the mirror ("vostro") for A. Cross-border wires hop along these accounts, with each correspondent charging a lifting fee and applying its own AML/sanctions screening.
Why it matters
The number of active correspondent relationships has dropped 30%+ since 2011 as banks de-risk lower-volume corridors. For exporters in those corridors, that translates to longer hops, higher fees, and stricter KYC — the practical reason stablecoins and ISO 20022-native rails attract attention.
Related terms
- SWIFT gpi
- Nostro / Vostro
- De-risking
- Lifting Fee