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I've recently read that banks are offering multi-currency accounts to their business customers. How do they actually work? Is it one bank account and the balance is available in, let's say for example, EUR and USD? What exchange rate are they using and which currency is the main currency?

What's the advantage of having a multi-currency account vs. two bank accounts at the same bank, one in EUR the other in USD?

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  • For US citizens, and maybe others, one disadvantage is that many of these accounts are held outside the US, so they aren't eligible for FDIC insurance.
    – John Bensin
    Jun 7, 2013 at 15:14
  • @JohnBension Even if held in the U.S., would a non-USD balance even be covered by the FDIC? (FWIW, in Canada, deposit insurance from the CDIC doesn't apply to non-CAD deposits, and USD accounts here abound.)
    – Chris W. Rea
    Jun 7, 2013 at 16:38
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    @ChrisW.Rea Yes. The FDIC does cover accounts denominated in foreign currencies, per section 330.3, subsection c).
    – John Bensin
    Jun 7, 2013 at 16:47
  • @JohnBension Interesting to know! (I also noticed they pay the guarantee with an equivalent amount of USD.)
    – Chris W. Rea
    Jun 7, 2013 at 18:00
  • @ChrisW.Rea Yep. That way, the law still promotes confidence in the banking system without the FDIC having to estimate an amount of each major foreign currency to stockpile in case it needs to pay guarantees in that currency.
    – John Bensin
    Jun 7, 2013 at 18:26

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Today typically a Business needs to hold accounts in more than one currency. Banks in certain countries are offering what is called a dual currency account. It is essentially 2 accounts with same account number but different currency. So One can have an account number say 123456 and have it in say AUD and USD.

So the balance will always show as X AUD and Y USD. If you deposit funds [electronic, check or cash] in USD; your USD balance goes up. Likewise at the time of withdrawal you have to specify what currency you are withdrawing.

Interest rates are calculated at different percentage for different currencies.

So in a nutshell it would like operating 2 accounts, with the advantage of remembering only one account number. Designate a particular currency as default currency. So if you don't quote a currency along with the account number, it would be treated as default currency. Otherwise you always quote the account number and currency. Of-course bundled with other services like free Fx Advice etc it makes the entire proposition very attractive.

Edit:
If you have AUD 100 and USD 100, if you try and withdraw USD 110, it will not be allowed; Unless you also sign up for a auto sweep conversion. If you deposit a GBP check into the account, by default it would get converted into AUD [assuming AUD is the default currency]

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  • As a side note, in the US the exchange rate used is usually the daily rate published by the Federal Reserve.
    – John Bensin
    Jun 7, 2013 at 16:55
  • What would happen if you withdrew more USD than you had in, but still had substantial USD? Would AUD be automatically converted to USD, or would the account be overdrawn on the USD side?
    – DJClayworth
    Jun 7, 2013 at 17:27
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    @DJClayworth Do you mean if you withdrew more USD than you had in, but still had substantial AUD? I always thought multi-currency accounts referred to the same pot of money, just denominated in two different currencies, with one as the "base" (e.g. USD). If you put in a withdrawal request for AUD, and it was more than the value of your account in USD based on the current exchange rate, you would be overdrawn.
    – John Bensin
    Jun 7, 2013 at 17:48
  • While the account number is the same are they truly two separate bank accounts, 123456AUD and 123456USD? How these would work with many of the online services like Mint which connect to bank accounts? Would they see two accounts as identified above? Or would they see one account and maybe mistake it all for one currency? Or do they handle multiple currencies in a single account appropriately?
    – cclark
    Dec 3, 2015 at 18:56
  • @cclark It is evolving. So not sure how it works with Mint etc. Remember there is a default account. So if nothing is specified, it would only show default account is my best guess.
    – Dheer
    Dec 4, 2015 at 9:42

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