Why JPMorgan Chase Keeps Checking Accounts at Hundreds of Other Banks

The hidden trillion-dollar infrastructure that powers global finance

Here's a fact that sounds impossible: JPMorgan Chase, one of the world's largest banks with $3.4 trillion in assets, maintains checking accounts at hundreds of other banks around the world. And those same banks keep checking accounts at JPMorgan.

Why would the biggest banks in the world need bank accounts like regular people?

The answer reveals the hidden architecture that makes global finance possible—and it all started with one man's audacious vision in 1973.

The Visionary Who Built Global Banking

Walter Wriston, CEO of Citibank, was studying maps in his Park Avenue office, looking at countries where Citibank had no presence: Brazil, Indonesia, Nigeria, the Philippines. His goal seemed impossible for 1973: make international banking as simple as domestic banking.

Most bankers saw regulatory nightmares. Wriston saw opportunity.

His insight would define modern banking: to serve global customers, you need global infrastructure. And global infrastructure meant something that sounds absurd—Citibank would need to open checking accounts at banks in every country where they wanted to do business.

The Problem Money Can't Solve

Why can't banks just create foreign currency? The answer is deceptively simple: you can't physically ship money internationally.

When Deutsche Bank's customers need to send dollars to American suppliers, Deutsche Bank faces a fundamental problem—they can't create dollars out of thin air. They need actual US dollars, held in actual accounts at actual American banks.

So Deutsche Bank maintains "nostro accounts" (Latin for "ours") at major US banks like JPMorgan. These accounts hold millions of pre-positioned dollars to serve their customers' payment needs.

From JPMorgan's perspective, Deutsche Bank's account is a "vostro account" (Latin for "yours"). It's Deutsche Bank's money, but it sits on JPMorgan's books.

And here's the reciprocal part: JPMorgan maintains nostro accounts at Deutsche Bank for their customers who need euros. Each bank is simultaneously a correspondent and a customer.

The Trillion-Dollar Capital Trap

Here's what would shock most people: this system requires enormous amounts of capital to sit virtually idle worldwide.

JPMorgan probably maintains $50-200 million in nostro accounts for major currencies, and $10-50 million for smaller currencies. Across all relationships, they likely have $15-25 billion tied up in nostro accounts globally.

Scale this across the banking system: if 30 major banks each maintain $10-20 billion in nostro accounts, and 100+ regional banks hold $1-5 billion each, the global system probably ties up $400 billion to over $1 trillion in low-yielding capital.

This money earns minimal returns—essentially the cost of doing business in a global economy.

Why Fintech Can't Kill This System

Given these massive inefficiencies, why haven't fintech companies eliminated correspondent banking?

Cryptocurrency promised direct peer-to-peer payments with no intermediaries. But crypto volatility makes it unsuitable for most commercial payments, regulatory restrictions limit adoption, and most "crypto payments" still require conversion through traditional banks.

The successful fintech companies—Stripe, Wise, others—have optimized correspondent banking rather than eliminated it. They use technology to make the existing system faster and cheaper, but haven't replaced its basic mechanics.

Even Circle's USDC strategy essentially creates digital nostro accounts rather than eliminating the need for pre-positioned liquidity.

The Network That Won't Die

Why does this 50-year-old system persist? Network effects.

SWIFT connects over 11,000 financial institutions in 200+ countries. For any alternative to succeed, it needs similar scale—but banks won't adopt new systems until enough counterparties use them. This creates a chicken-and-egg problem that has prevented wholesale replacement despite decades of technological advancement.

The correspondent banking system is inefficient and capital-intensive, but it's also universal, battle-tested, and embedded so deeply in global commerce that replacing it would require coordinated action across thousands of institutions.

What This Means for Entrepreneurs

Understanding nostro/vostro accounts reveals crucial implications for anyone building global payment solutions:

Build on the system, don't fight it. Successful companies optimize correspondent banking rather than replace it.

Regulatory relationships are moats. Extensive compliance requirements create advantages that pure technology can't replicate.

Capital requirements are real. Global payment services require either building nostro networks (hundreds of millions in capital) or partnering with banks that have them.

The biggest opportunities exist in the layer above correspondent banking—better user experiences, improved transparency, optimized currency conversion—without requiring replacement of the underlying system.

Want the full story? Read my complete deep-dive into nostro/vostro accounts, including Walter Wriston's global expansion strategy, the 24-hour liquidity management challenges, and why this medieval system still powers modern finance

What surprised you most about how global banking actually works? Share your thoughts in the comments.