The development of the banking sector enables the provision of financing opportunities and the utilization of high banking liquidity, especially if suitable mechanisms can be provided for local institutions to borrow from private banks to finance infrastructure projects. This will improve the composition of loans provided by banks that are predominantly of a personal nature . The development of the banking system is a major source of raising banking growth and sustainable development. After the economic transformations after 2003, the banking sector in Iraq has grown, with a variety of banks and services offered by these banks, including investment, loan provision, and facilitation for savers, while others have contributed to stimulating trade exchange, as many Iraqi banks have sought to promote sustainable development . The Central Bank is the primary and sole entity responsible for ensuring the stability and continuity of the banking system. It has the authority to supervise and regulate banks, granting them licenses, and serving as a lender of last resort. The Central Bank carries out its supervisory function through specialized technical devices and various tools. Its supervision aims to ensure that banks comply with all procedures and instructions issued by the Central Bank, as well as the soundness of their financial and credit positions. The supervision and oversight of banks are conducted through laws, regulations, instructions, inspections of licensed banks, and audits of their records and data . One of the main items on the agenda of the Central Bank is the supervision and review of loans and credit facilities, in addition to improving economic conditions and achieving development. This includes evaluating the status, movement, and balances of these loans, updating credit information about borrowers, identifying sound loans, and making necessary provisions for loans. It also involves assessing the bank's compliance with specified regulations The policy followed by the Central Bank of Iraq serves as a tool for monetary policy to enhance banks' capacity to manage short-term liquidity and indirectly guide the necessary monetary policy. This can be evaluated based on various intermediate variables, including the exchange rate return and the growth rate in the money supply in terms of its ability to manage liquidity. Monetary policy tools adopted by the Central Bank should work in conjunction with other financial markets and securities to create an efficient payment system that instills confidence in banks to meet their obligations at reasonable costs. It also involves providing liquidity through additional needs such as cash reserves with the Central Bank and excess balances for legal reserve requirements.