Full Breakdown
Palestinian Authority Moves Toward Electronic Payments Amid Banking Crisis
6/30/2026, 1:44:01 PM
Shift to Electronic Payments as a Crisis Response
Deputy Governor of the Palestinian Monetary Authority (PMA), Mohammad Manasra, announced that the Palestinian banking sector will increasingly rely on electronic payments. The policy is presented as a multi-track approach to mitigate a financial crisis linked to Israeli cash-transfer restrictions.
Background: Israeli Cash Transfer Restrictions and Surplus Shekel Accumulation
Israeli authorities limit the amount of shekel cash that Palestinian banks can remit to Israeli correspondent banks to NIS 18 billion per year. The cap is issued through letters of indemnity from Israel’s Finance Ministry, which have faced repeated obstruction. Economists, including Mohammed Samhouri, argue that the ceiling covers only about half of the amount required to sustain normal banking operations. Consequently, Palestinian banks hold a surplus of shekel cash that cannot be transferred, threatening their ability to finance cross-border trade with Israel.
Key Actors
- Mohammad Manasra – Deputy Governor, Palestinian Monetary Authority.
- Mohammed Samhouri – Palestinian economist cited on the cash-transfer ceiling.
- Bank Hapoalim and Israel Discount Bank – Israeli banks designated for cash repatriation.
- Israel’s Finance Ministry – Issuer of letters of indemnity that enable cash transfers.
- Arab Center Washington DC – Research organization reporting on shekel accumulation.
Data and Statistics
- Annual cash-transfer ceiling: NIS 18 billion.
- 2024 imports from Israel: > 50 % of Palestinian Authority (PA) imports.
- 2024 exports to Israel: > 80 % of PA exports.
- Surplus shekel holdings in Palestinian banks have reached levels described as “unsustainable” by the Arab Center Washington DC.
Why It Matters: Economic and Trade Implications
The cash-transfer ceiling and surplus shekel holdings constrain the ability of Palestinian banks to finance imports and exports, which in 2024 accounted for more than half of all imports and over 80 % of exports with Israel. The shift to electronic payments is intended to restore liquidity, reduce cash-handling costs, and stabilize cross-border trade.
Official Statements & Responses
Manasra emphasized that the newly introduced law to limit cash transactions aims to “build a stronger economy, not to burden civilians.” He added that full implementation will depend on establishing an integrated electronic-payments infrastructure over a two-year period. The PMA has framed the shift as a structural reform rather than a temporary measure.
Criticism & Opposition
Economist Mohammed Samhouri repeatedly highlighted that the NIS 18 billion ceiling is insufficient, stating that it “barely reaches half the necessary levels.” Critics argue that the restriction hampers the banking system’s capacity to finance trade and that the cash-surplus problem reflects broader Israeli economic pressure on the PA.
Conflicting Reports & Gaps
Sources differ on the precise magnitude of the cash surplus; while the Arab Center Washington DC describes it as “unsustainable,” no exact figure is provided. Additionally, the exact number of shekel deposits refused by banks is not disclosed, leaving a gap in quantifying the immediate impact on individuals and businesses.
What Comes Next
The PMA plans to roll out the electronic-payments framework gradually, targeting full integration within two years. Monitoring will focus on the ability of banks to resume cross-border transactions, the effectiveness of the indemnity letters, and any adjustments to the cash-transfer ceiling in response to evolving economic conditions.
