Bank Association: Shekel Surplus Crisis Reaches Critical Levels Threatening Banking System's Ability

SadaNews: The Bank Association in Palestine expressed its deep concern regarding the escalation of the cash accumulation crisis from the shekel currency in the banks operating in Palestine, which has reached critical levels threatening the banking system's ability to settle financial obligations with the Israeli side, indicating serious repercussions for financial and economic stability in the country. The association addressed international institutions such as the World Bank and the International Monetary Fund, as well as political entities like the European Union and the United States, at the beginning of June to intervene to resolve this chronic crisis due to its serious implications for the Palestinian economy.

The statement mentioned: "As everyone knows, this crisis is attributed to the strict and ongoing Israeli restrictions on the ceilings of shekel transfers from banks operating in Palestine to Israeli banks, leading to the accumulation of large amounts of shekels exceeding the operational needs of banks and incurring increasing financial losses due to the inability to invest this surplus. In addition to draining the banks' capacity to conduct foreign exchange transactions (SWAP) to provide electronic shekels to fund their accounts with Israeli banks to meet trade financing needs and ensure the continuous supply of essential materials like food, fuel, and gas."

The statement continued: "It should be noted that the congestion crisis intensifies before the commencement of transferring funds to the Israeli side, given the accumulation of shekels over three months (17 billion shekels), placing a significant burden on banks to fulfill their obligations to their customers at a time when their account balances with Israeli banks are at their lowest levels, sometimes even without balance."

The association emphasizes that the Palestinian banking sector works hard to meet its obligations as much as possible under these difficult circumstances, including limiting the issuance of checks that may be misused or that are tied to trade operations constituting a commitment on banks that they may not be able to fulfill.

The association reaffirms its steadfast commitment to enhancing economic and financial resilience and protecting the Palestinian banking system under conditions that require a collective national effort to confront this chronic crisis beyond our control.