The Palestinian economy is facing an extraordinary financial squeeze as banks across the occupied West Bank become overwhelmed by physical cash they can no longer process. Businesses are struggling to pay suppliers, fuel stations face disruption and officials warn the growing backlog is pushing the territory deeper into economic crisis.

The problem is not a shortage of money. It is having too much of it trapped inside a banking system that cannot move it.

Banks Drowning in Cash

Across the West Bank, businesses are finding banks increasingly unwilling to accept cash deposits because vaults are already overflowing with Israeli shekels.

The crisis stems from Israeli limits on the amount of physical currency that can be transferred back to the Bank of Israel. Palestinian officials say commercial banks now receive around 30 billion shekels annually, while Israel permits only 18 billion shekels to leave the territory each year, leaving billions stranded inside the financial system.

Economic Pressure Builds

Palestinian Monetary Authority deputy governor Mohammad Manasra described the situation as "economic warfare", arguing banks have been effectively paralysed.

Unable to convert physical cash into electronic balances, banks are finding it harder to process payments for fuel, electricity and imported goods. At the same time, they face rising costs to store and insure growing piles of banknotes that generate no income.

War Deepens the Financial Squeeze

The crisis has intensified since the outbreak of the Gaza war in October 2023. Israel has revoked most work permits for Palestinians, withheld tax revenues collected on behalf of the Palestinian Authority and imposed measures that have further weakened the West Bank economy.

Israeli officials have previously cited concerns over money laundering, tax evasion and terrorism when limiting cash transfers. The Bank of Israel says it is implementing government policy and has argued fewer Palestinians working in Israel has reduced cash inflows since the war began.

Businesses Warn of Wider Collapse

For companies operating in cash-heavy sectors, the consequences are becoming severe. Some firms are taking out loans simply to make electronic payments while sitting on millions of shekels they cannot deposit.

Fuel suppliers have already warned of disruptions, with some filling stations temporarily closing and operators staging protests over the crisis. Business leaders fear that unless the deadlock is resolved, companies will increasingly struggle to import fuel, food and medical supplies, raising the prospect of broader economic disruption across the West Bank.

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

To much cash in the bank'Sounds like good news to me but Palestinians find more to moan about.

1 hour ago, Tidal wave said:

To much cash in the bank'Sounds like good news to me but Palestinians find more to moan about.

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