Achieving monetary stability remains a critical challenge for Iraq, primarily due to its heavy reliance on oil revenues and heightened vulnerability to external financial shocks. The volatility of global oil prices and frequent fiscal imbalances have complicated theCentral Bank of Iraq’s (CBI) efforts to maintain monetary equilibrium. This study investigates the effectiveness of the monetary sterilization mechanism in stabilizing Iraq’s monetary environment between 2004 and 2023. Using annual data from official sources, primarily the CBI, the research employs an econometric approach, integrating a deductive methodology with descriptive analysis and quantitative modelling. The study estimates the sterilization coefficient and evaluates its impact on key monetary indicators, including inflation and exchange rate stability. The findings reveal that sterilization policies have a statistically significant effect on short-term monetary stability, mitigating immediate price and currency volatility. However, the long-term impact is statistically insignificant, largely due to structural economic limitations, such as the predominance of oil exports, shallow financial markets, and restricted monetary policy tools. The empirical results suggest that Iraq practices partial rather than full sterilization, leading to residual inflationary and deflationary pressures. The study recommends developing more diverse and sustainable monetary policy instruments, strengthening coordination between monetary and fiscal policies, and promoting economic diversification to achieve enduring monetary stability.

This research aims to show the impact of foreign trade on foreign reserves in Iraq for the period (2004-2021). As a result of the increasing interest in recent decades in the issue of foreign reserves and their management, which accompanied the increase in economic crises, so that keeping an appropriate percentage of these reserves becomes a safety factor against economic crises at home and abroad and an important investment tool. With regard to the Iraqi economy, the lifting of the economic embargo after 2003 and the increasing values of oil exports with the rise in oil prices led to large financial revenues from foreign exchange, which led to a significant increase in the volume of foreign reserves in the budget of the Central Bank. Oil is considered one of the most influential variables on foreign reserves in Iraq, because Iraq relies almost entirely on financing its expenditures and imports through the production and export of oil only. This research used the descriptive method and the standard method using time series, the cointegration model, the test of instability of variance, and the autocorrelation test (LM). The research reached a number of conclusions, the most important of which are: (69%) of the changes in the dependent variable are due to the independent variables. There is also a positive relationship between foreign reserves and exports. There is a long-term equilibrium relationship between the research variables.