What is a National Bank?

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  • Written By: Grayson Millar
  • Edited By: J.T. Gale
  • Last Modified Date: 16 August 2019
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Depending on the nation in question, there are a few different meanings to which the term national bank may refer. In some countries — generally those that are classified as developing countries — a national bank is owned and operated by the government, which is the closest to the historical meaning of a national or central bank. Despite the connotations of the term, the majority of national banks worldwide are actually privately owned commercial banks that do business nationally; in some cases, especially in the United States, a national bank may not even operate nationally but is classified as such due to its regulation by government standards.

The relation between the terms national bank and central bank is indicative of their historic interchangeability. Nonetheless, national banks are no longer necessarily central, government-owned banks, which historically hold a monopoly on distributing the currency of the country and, in many cases, actually loaning it to the government. The central bank structure, however, does still function in many developing countries where the national bank is also the central bank. There are numerous exceptions to the common distinction between the two terms national and central bank and the national bank structure in countries thought of as developing, especially as these countries continue to make economic progress.


In many world nations, national banks are privately owned commercial banks that do business throughout the nation. The number of national banks within these countries varies, generally in relation to the population of the country and its economy. These banks conduct exchange with the official currency of the nation — often distributed and produced by a central bank — whether it is a specific national currency or an international currency, such as the Euro. Most normal private banks in countries that have a certain amount of commerce are considered national banks.

National banks in the United States are financial institutions that function within a system of regulations that is stipulated by the US government and are chartered by the Office of the Comptroller of the Currency. Like national banks elsewhere, these privately owned commercial banks conduct business in the official currency of the nation — the US dollar. A great number of them do business throughout the nation, though a national level of operation is not required for classification as a national bank in the US. Chartering by the Office of the Comptroller of the Currency refers to the bank's operating in accordance with government regulations specified in the National Bank Act.


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