How Much Money Does Israel Give To The West Bank

RAMALLAH (AFP) — Palestinian businesses flush with too much Israeli cash: it may not be the nigh talked-about aspect of the conflict, but some warn it is a growing business organization for the Palestinian economy.

Palestinians in the Due west Banking concern use the Israeli shekel but, beyond that commonality, the ii financial systems are dramatically different.

In Israel, every bit in many avant-garde economies, digital payments are chop-chop growing, taking the place of transactions once done with bills and coins.

But in the West Bank, a territory nether fractional Israeli military control since 1967, cash is still king.

Tasir Freij, who owns a hardware store in Ramallah, told AFP he now has to pay a two pct committee to deposit paper coin because his banking company is reluctant to receive information technology.

"This is a crisis… and we are feeling its effects," Freij told AFP.

Much of the newspaper money is brought in by the tens of thousands of Palestinians who work inside Israel or Jewish settlements in the West Bank, and who get their wages in cash.

Palestinians walk in front of a currency exchange counter in the West Bank metropolis of Ramallah on October v, 2021. (ABBAS MOMANI / AFP)

Experts and business concern people say the buildup of hard currency risks stifling the Palestinian financial system.

Freij fretted that buying goods from away typically requires converting shekels into foreign currencies, particularly dollars or euros, but the abundance of shekels in the market has forced him to accept painfully unfavorable rates.

'Dumping ground'

The Palestinian Budgetary Dominance, which functions as the central bank in the West Depository financial institution, has warned that paper shekels are building upwards considering it has no way to render the hard currency to Israel.

PMA governor Firas Melhem told AFP that the cash buildup was "a very worrying problem," causing headaches for banks and businesses.

"If the problem is not resolved quickly, the Palestinian market place will turn into a dumping basis for the shekel," he added.

The shekel was established as the official currency in the West Bank and the Gaza Strip as a result of economic protocols known as the Paris agreements that followed the Oslo Accords between Israel and the Palestinian Authority.

A Palestinian man counts stacks of banknotes at a currency commutation counter in the West Bank city of Ramallah on October v, 2021. (ABBAS MOMANI / AFP)

Much has changed since those 1994 agreements.

As they lean more than on digital transactions, State of israel'south banks no longer want to reabsorb newspaper cash that accumulates in the West Bank but does not circulate rapidly through the Israeli economy.

The Bank of Israel cited security every bit another reason.

"We stress that uncontrolled cash transfers could be misused, particularly for money laundering and terror funding, and would not be in compliance with international standards on the prohibition of money laundering and terror funding," the bank told AFP in a statement.

Solutions?

Palestinian banks have tried to encourage customers to moderate their greenbacks deposits, but that risks limiting the capital available to banks, which would lower their power to offer loans.

The cash surplus predicament has fueled renewed calls from some Palestinian experts in favor of ditching the shekel, either in favor of a unique Palestinian currency or that of some other nation, including the Jordanian dinar, which as well circulates in the West Banking concern.

The Palestinian Monetary Authority is likewise pushing the Depository financial institution of Israel to take back more hard currency.

Just Melhem stressed that Palestinians too needed to "keep upwardly with developments in financial technologies," and move towards more cashless payments.

Times of Israel staff contributed to this report.

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Source: https://www.timesofisrael.com/palestinians-blame-shekel-surplus-for-weighing-down-west-bank-economy/

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