Bank Identification Code (IBAN): what it is – Dictionary of Economics

International bank account identification number. The IBAN (International Bank Account Number) standard was created to help banks automate transfers within the European Union (EU), so that intra-community payments are assimilated to national payments and the same rates can be applied. Until the approval of the EU Regulation on cross-border payments in euros, account numbering systems were strictly national and it was not possible to identify in which country an account was opened. The IBAN code adds four characters before each account number: two letters that identify the country and two control figures to avoid transcription errors. For an intra-community transfer to be subject to the same commission as a national transfer of the same amount, the payer must provide the bank with the IBAN and BIC (Bank Identifier Code) of the beneficiary.

Origin: Bank of Spain