Britain's pound sterling is one of the more highly valued foreign currencies due to its exchange rate.
There are several definitions for foreign currency banking. You may simply be exchanging currencies at your domestic banking institution or opening a foreign bank account. It could also refer to banking investments on a much higher level.
Foreign Currency Exchange
If you are traveling to another country you may want to obtain funds in that particular currency. Some local banks will have stores of foreign currency on hand as well as related travelers checks. However, sometimes you need to go to the main branch of a bank to find foreign currency on hand and switch your dollars.
Overseas Accounts
One of the functions of a foreign bank account is you can hold the account in a foreign currency. This is especially attractive if the currency offers a favorable exchange rate at any given time and the interest rate on the account is sound. However, there is always the risk that there will be a devaluation in that currency and you will have lost money in the investment.
Investment Banking and Reserves
Often, international investment banks will trade in foreign currencies based on speculation of value in that currency. The federal government may also get involved through a central bank like the United States' Federal Reserve which can also reserve foreign monies. They may do their own investing or monitor market fluctuations in foreign currency.
