LONDON: Israeli authorities have approved the early transfer to the Bank of Israel of 4.5 billion shekels ($1.47 billion) in cash accumulated by Palestinian banks, following intensive talks mediated by international parties.
Yahya Shannar, governor of the Palestine Monetary Authority, said on Tuesday that shipments of the excess currency planned for the fourth quarter of 2026 had been moved forward and would begin this week, the Palestinian Wafa news agency reported.
The move will alleviate a shekel-surplus crisis in the banking sector, improve liquidity levels, and support Palestinian banks’ accounts with their Israeli counterparts, Shannar added.
The Monetary Authority serves as the de facto central bank for the Palestinian Authority. However, Palestinian banks rely on the Bank of Israel to accept the excess cash they accumulate and credit them electronically, thereby facilitating payments so that they can meet the needs of customers.
The Israeli shekel is the most commonly used currency in the West Bank, alongside the US dollar, the euro and the Jordanian dinar. Israeli banks are also used to facilitate trade, collect taxes on behalf of the Palestinian Authority, and process payments for imported goods under agreements signed in the 1990s.
Israel has set an annual limit of 8 billion shekels for currency transfers from Palestinian banks, significantly lower than the 30 billion shekels accumulated last year. The Palestinian Authority has repeatedly accused Israeli authorities of “economic strangulation,” saying that the assets of Palestinian banks are tied up in cash, which prevents them from transferring funds to pay for imports of fuel, water and electricity.
Shannar encouraged Palestinian banks to expand the use of electronic payments as he highlighted the need to establish a sustainable mechanism to reduce reliance on the shekel in daily transactions, Wafa reported.
