What is the primary purpose of introducing the International Bank Account Number (IBAN) format?

The primary purpose of the International Bank Account Number (IBAN) format is to improve straight-through processing rates across the EU. By establishing a standardized format for bank account numbers that is recognized internationally, IBANs facilitate easier and more efficient processing of cross-border payments and transactions. This standardization helps to reduce errors and streamline the payment process, allowing for quicker and more reliable transactions without manual intervention.

The introduction of IBAN has specifically aimed to enhance the efficiency of payment systems within Europe and beyond, making it easier for financial institutions to process payments automatically, which in turn supports international trade and financial operations. As more transactions are processed automatically, the need for manual intervention decreases, thus improving overall processing speed and accuracy.

In contrast, options pertaining to security enhancements, tax reporting standardization, or currency exchange limitations do not directly address the fundamental purpose of IBAN. Although security and currency exchange processes may benefit indirectly from improved transaction efficiency, they are not the primary focus of the IBAN framework.