The Palestinian economy is struggling. In the West Bank, the problem is too much cash

The West Bank is experiencing an unusual economic crisis due to an excessive amount of Israeli shekels within its banking system, making it difficult for residents to spend and businesses to deposit money. This surplus stems from a conflict between the Bank of Israel and the Palestinian Monetary Authority, with Israel limiting the amount of physical currency it accepts back from the West Bank. Palestinian officials, including Mohammad Manasra, Deputy Governor of the Palestinian Monetary Authority, describe this as "economic warfare," stating that "The banks have been shackled." The West Bank's economy, heavily reliant on the shekel and cash transactions, sees more cash entering than exiting, primarily from Palestinian laborers paid in Israel and purchases by Palestinian citizens of Israel. This oversupply, estimated at 30 billion shekels annually against an 18 billion shekel transfer limit, prevents banks from converting cash into electronic balances for payments and loans, impacting businesses and the government's ability to import essential goods. Businesses like Al-Huda Group are struggling to pay suppliers, leading to concerns about a potential collapse of all sectors if the issue remains unresolved.