THE Palestinian Monetary Authority (PMA) (Pic) has urged the international community to take immediate action to resolve an escalating currency congestion crisis, warning that an overaccumulation of Israeli shekels in Palestinian banks could severely destabilise the region’s financial system.
In a statement following talks with the British Consul General, Helen Winterton, at the PMA’s headquarters in the central West Bank, Governor Yahya Shinar said the Authority had discussed “the crisis of excess shekel accumulation in banks operating in Palestine and its repercussions on the economic and banking conditions”.
The Authority warned that mounting cash liquidity was hindering banks’ ability to serve the needs of the public and commercial sectors. Shinar emphasised that while measures had been taken to maintain basic banking services, “international community intervention” was crucial in pressuring Israel to uphold existing agreements regarding the movement of shekels.
Winterton reaffirmed the United Kingdom’s support for Palestinian efforts to reinforce financial stability and called for “international coordination to address escalating economic challenges”.
The West Bank has seen the crisis worsen in recent weeks, with banks halting shekel deposits due to excessive accumulation. The PMA responded by imposing deposit ceilings and encouraging electronic payment systems.
According to the Authority, Israel has refused repeated requests to allow the transfer of excess shekels from Palestinian banks to Israeli institutions, instead enforcing limitations that fail to meet the operational needs of Palestinian banks.
Prior to the current conflict in Gaza, which began on 7 October 2023, approximately 4 billion shekels (US$1.16 billion) in surplus currency were transferred each quarter under coordinated arrangements between the PMA and Israeli banks.
The Association of Banks in Palestine, a non-governmental body, stated that “billions of shekels” are now stored in Palestinian bank vaults, obstructing replenishment of accounts in Israeli institutions and disrupting cross-border commercial and financial transactions.
Under the 1994 Paris Protocol, the Israeli shekel is recognised as the principal currency in Palestinian territories and is used for all major transactions. Palestinian exports to Israel make up roughly 85 per cent of total exports, while over half of all imports come from Israel, including essential commodities such as electricity, water, fuel, and food.
Banking activity in Palestine is estimated at an annual volume of 50 billion shekels. There are currently 13 banks operating in the territory—seven local institutions and six foreign banks, including five Jordanian and one Egyptian. - June 29, 2025
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