How do banks physically exchange world currencies?

Chips | 23:28 Thu 23rd Sep 2004 | Business & Finance

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How do banks physically exchange world currencies? I have dollars, how do banks 'convert them' or cash settle them as pounds?

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stevie21

They probably have accounts in both countries with some kind of state or international bank. Your bank here will have an account with someone like Citibank and an account in New York (or wherever) with Citibank. The money itself never crosses borders, Citibank just increase one balance and decrease the other. They can then also send money from Citibank NY to the local bank that you're sending money to. Just had a thought - do you mean physical money (notes) ? I'm explaining sending money electronicaly to the USA here.

Chips

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Both actually. Electronic and especially 'notes'. Bearing in mind if a bank sold from a 'stock' of currency, as rates change they could be held with bad stock.. so how does it work??

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