Most private banks in Iraq continue to rely heavily on the Central Bank of Iraq (CBI) without actively contributing to the country’s economic development, according to banking expert Mohamed Salem.

In an interview with Shafaq News Agency, Salem stated, “Most private banks engage in limited credit activities and do not contribute significantly to stimulating the Iraqi economy. Their revenue primarily comes from currency exchange, relying on electronic trading, hard currency, and electronic payments. They obtain dollars from the CBI, sell them, and make easy profits.”

Salem highlighted that while private banks have moved away from offering loans, they have taken a leading role in electronic trading and providing digital financial services such as ATMs. “Private banks have encouraged employees to localize their salaries through these services,” he said, adding that government banks, with the exception of the Trade Bank of Iraq, have struggled to keep up.

Despite these challenges, Salem noted that government banks remain a trusted option for depositors. “Government banks are still seen as reliable for safeguarding depositors’ funds, even after the theft and looting they experienced in 2003,” he emphasized.

Salem’s remarks highlight the growing divide between Iraq’s private and government banking sectors, particularly in terms of technological adaptation and service provision. While private banks are making strides in digital financial services, the reliance on CBI’s dollar allocations raises concerns about their role in Iraq’s broader economic development.