---
title: "Correspondent banking"
description: "The arrangement where one bank holds accounts and executes payments for another, enabling cross-border transfers between banks with no direct relationship."
reviewedBy: "Nikhil Srinivasan, Founder & CEO"
updated: "July 2026"
canonical: "https://infinite.net/learn/glossary/correspondent-banking"
---

# Correspondent banking

Correspondent banking is the arrangement in which one bank (the correspondent) holds an account for and provides services to another bank (the respondent), so that banks without a direct relationship can still move money between each other. Most cross-border payments today travel through chains of correspondent accounts, with a SWIFT message instructing each hop.

Mechanically, the arrangement runs on mirrored accounts: the respondent’s account at its correspondent is its nostro ("ours"), and the correspondent calls the same account a vostro ("yours"). Money does not physically cross borders — banks debit and credit these accounts, and a SWIFT message instructs each adjustment.

Each hop in a correspondent chain adds time, fees, and a fresh compliance review — the payment only moves as fast as the slowest bank’s checks. And because correspondents carry the compliance risk of every respondent they serve, many have "de-risked" out of whole regions, leaving fewer, more congested paths for the corridors that need them most.

This is the structural problem Infinite’s network addresses: instead of re-vetting a counterparty at every hop, a counterparty vetted once on the network is vetted for every participant, and Transfer Routes can route around slow paths across SWIFT, US rails, stablecoins, and FX automatically.

## Frequently asked questions

### What are nostro and vostro accounts?

Two views of the same correspondent account. A bank’s account held at another bank is its nostro ("ours"); the bank holding the money calls it a vostro ("yours"). Cross-border payments settle as debits and credits across these accounts rather than as money physically crossing borders.

### How is an intermediary bank different from a correspondent?

A correspondent bank maintains a standing account relationship with another bank and provides ongoing services across currencies. An intermediary bank is whichever bank a specific payment passes through when the sender’s and beneficiary’s banks lack a direct relationship — a role usually filled by a correspondent.

### What is de-risking in correspondent banking?

Correspondents carry the compliance risk of every respondent bank they serve, so many have exited whole regions rather than manage it — leaving fewer, more congested paths for the corridors that need them most. [Cross-border payments](https://infinite.net/use-cases/crossborder-payments)

## Where it fits on Infinite

- [SWIFT Payments](https://infinite.net/payments/swift)
- [Transfer Routes](https://infinite.net/payments/transfer-routes)
- [Cross-border payments](https://infinite.net/use-cases/crossborder-payments)

## See also

- [SWIFT](https://infinite.net/learn/glossary/swift.md)
- [Stablecoin](https://infinite.net/learn/glossary/stablecoin.md)