‘Economic warfare?’ In the West Bank, too much cash is breaking the Palestinian economy

The West Bank is experiencing an economic crisis due to an excessive accumulation of Israeli shekels within its banking system, making cash difficult to spend and deposit. This issue stems from a disagreement between the Bank of Israel and the Palestinian Monetary Authority regarding the amount of physical currency Israel will accept back from the West Bank. Palestinian officials argue that Israel's cap on currency returns, set at 18 billion shekels annually while an estimated 30 billion shekels enter, has not kept pace with economic growth and constitutes "economic warfare," according to Mohammad Manasra, Deputy Governor of the Palestinian Monetary Authority. The surplus cash, largely from Palestinian laborers in Israel and Israeli citizens purchasing goods in the West Bank, cannot be converted into electronic balances, hindering banks from processing payments and transfers. This situation forces businesses to find alternative payment methods and secure storage for their cash, with fears that it could lead to the collapse of various sectors if unresolved.