In simple words, it refers to the foreign bank account established through the domestic bank in the respective country of the currency desired.
🏮Advantages
➖You can pay the money to a third party in your home currency without taking any exchange rate risk.
➖Easy to operate since it is a mere transfer of funds from one account to another in the same bank.
➖Enables to keep funds in foreign currency.
➖Reduces the excessive fluctuation risk in exchange rates since money is directly emitted to the other party without physically been there.
🏮Disadvantages
➖A lesser rate of interest as compared to savings or current account.
➖Generally more expensive since it is a facility provided by the home bank to execute foreign exchange transactions smoothly.
➖Rigorous regulations and laws imposed for the operation of the Nostro account by the federal bank.
➖Open to cyberattacks which can have a huge impact on the cash reserves of the bank if the same are hacked.
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