Question

Explain What is Nostro Vostro Loro in Banks and give one good example of Non Tariff Trade Barrier

Answer 1

Nostro Account: These accounts are held by domestic banks in foreign countries with a foreign bank. It is maintained in terms of the foreign currency.

Vostro Account: These accounts are held by foreign banks in the domestic country. It is maintained in terms of the domestic currency.

LORO Account: These accounts are maintained and held by third parties. If Bank A wants to transact with Bank B but doesn't hold any account in Bank A, in that case, Bank B can use a third party, i.e., Bank C which has an account in Bank A.

Quotas are an example of non-tariff barriers. These are imposed by the government to restrict the quantity of exports and imports within a country. Quotas are used for regulating the trade volume of a country.