Full Breakdown
West Bank Cash Surplus Paralyzes Banking and Commerce
7/21/2026, 12:09:29 PM
Core Crisis: Overflow of Israeli Shekels Stalls Payments
Commercial banks in the Israeli-occupied West Bank are unable to accept additional banknotes and coins because the Bank of Israel caps the amount of physical shekels it will take back from Palestinian banks. The cap—18 billion shekels (? $5.9 billion) per year—has been exceeded by an estimated 30 billion shekels flowing into the territory each year. With vaults full, banks cannot convert cash into electronic balances, preventing routine transfers, supplier payments, and salary disbursements.
Background: Monetary Authority vs Bank of Israel Policy
Since the 1990s the West Bank has relied almost exclusively on the Israeli shekel for trade, tax collection, and imported-goods payments. After the Gaza war began in October 2023, Israel revoked most work permits for Palestinians and withheld tax and customs revenues collected on behalf of the Palestinian Authority. These measures, combined with the unchanged cash-transfer limit, have created a surplus that Palestinian officials describe as a tool of “economic warfare.”
Data & Statistics
- Annual cash inflow to West Bank banks: ? 30 billion shekels (Moayad Afaneh, economist).
- Annual cash-outflow limit imposed by the Bank of Israel: 18 billion shekels.
- 2022 IMF study: excess cash cut Palestinian-bank profits by about 20 %, a figure Afaneh believes is now higher.
- Fuel and electricity imports are paid to Israeli suppliers; banks’ cash glut hampers these electronic payments.
Impact on Government and Private Sector
The cash glut restricts the Palestinian Authority’s ability to pay public-sector workers, including teachers and healthcare staff, for more than a year. Private firms, such as the Al-Huda Group, collect tens of millions of shekels monthly but cannot deposit most of it, forcing them to take loans, purchase foreign currency, or halt operations. Some gas stations have temporarily stopped dispensing fuel because they cannot settle supplier invoices electronically.
Official Statements & Responses
- The Bank of Israel says it follows the Israeli government’s policy on cash transfers and notes that fewer Palestinians work in Israel since the Gaza war, reducing inflows.
- Bezalel Smotrich, Israeli Finance Minister, threatened in September 2025 to “use all of the tools” to prevent a Palestinian state, citing economic pressure.
- The Palestinian Authority cited the banking crisis when fuel stations closed temporarily and called for a revision of the cash-transfer cap.
- Mohammad Manasra, deputy governor of the Palestinian Monetary Authority, warned that the surplus is “directly affecting the government’s ability and the private sector’s capacity to continue providing services to major industrial sectors and the Palestinian people.”
Criticism & Opposition
Palestinian officials label the cash-transfer restriction as “economic warfare” and argue the cap has not kept pace with economic growth. They contend the policy is a deliberate lever to keep the West Bank in a state of economic crisis, especially after Israel’s broader measures—work-permit revocations and revenue withholding—following the October 2023 Gaza conflict.
On-the-Ground Reports
At the Al-Huda Group’s Ramallah headquarters, clerks feed banknotes into counting machines, yet large cash piles remain undeposited. Executive manager Hussni Jaber reports that businesses must borrow or exchange cash into other currencies to make electronic payments, and that some fuel stations have halted service due to payment bottlenecks. A coordinated 30-minute strike by gas-station owners highlighted the crisis but elicited no immediate policy response.
Verbatim Quotes
- “The banks have been shackled” — Mohammad Manasra, deputy governor, Palestinian Monetary Authority
- “What is being practiced in the West Bank is economic warfare.” — Mohammad Manasra, deputy governor, Palestinian Monetary Authority
- “All sectors will collapse if the cash problem is not resolved,” — Hussni Jaber, executive manager, Al-Huda Group
- “directly affecting the government’s ability and the private sector’s capacity to continue providing services to major industrial sectors and the Palestinian people,” — Mohammad Manasra, deputy governor, Palestinian Monetary Authority
- “use all of the tools” — Bezalel Smotrich, Israeli Finance Minister (statement, September 2025)
