The Governor of the Monetary Authority Outlines the Challenges Facing the Palestinian Banking Sector

SadaNews - The Governor of the Monetary Authority, Yahya Shanar, has called on the international community, international financial institutions, and central banks to take urgent action and press Israel to stop the measures targeting the Palestinian financial sector, primarily the surplus shekel pile-up crisis, the withholding of clearance funds, and threats to sever correspondent banking relationships.

This came during the governor's participation in the financial conference of the Central Bank of Russia, held in St. Petersburg, with the presence of the Governor of the Bank of Russia, Elvira Nabiullina, along with central bank governors, financial institution heads, and economists from various countries around the world.

During a panel discussion addressing the challenges facing central banks amid global economic changes, the governor emphasized that the economic and financial reality in Palestine is confronting unprecedented challenges due to Israeli measures, which have become a direct threat to various vital sectors.

Shanar explained that the Palestinian banking sector is facing a worsening crisis represented by the accumulation of surplus shekels in banks operating in Palestine due to the Israeli side's refusal to accept it according to the agreed mechanisms, which limits the banks' ability to meet clients' needs and perform their daily operations efficiently, affecting economic activity and supply chains. He also warned of the repercussions of repeated threats to cut correspondent banking relationships between the two sides, which could pose risks to the stability of the financial system and the continuity of trade movements.

The governor highlighted the issue of Israel's continued withholding of Palestinian clearance funds, which has led to a mounting financial crisis affecting the government's ability to meet its obligations, impacting various economic sectors, and increasing the challenges faced by the Palestinian economy.

Shanar stressed that the Palestinian banking sector enjoys the trust of international institutions, applying the highest standards of regulation, governance, and compliance, as evidenced by the advanced results Palestine has achieved in the mutual evaluation by the Financial Action Task Force for the Middle East and North Africa (MENAFATF), reflecting the robustness of the regulatory environment overseen by the Monetary Authority.

The governor affirmed the importance of the Russian Federation's role in addressing the challenges faced by the Palestinian economy and financial sector, being a country of significant economic influence at the international level, indicating that enhancing dialogue and communication with the Russian side contributes to raising these challenges at both regional and international levels and supports efforts to mitigate their impacts.

On the sidelines of the conference, the Governor of the Monetary Authority held a meeting with His Excellency the Ambassador of the State of Palestine to the Russian Federation, Abderrahman Noufal, where the importance of strengthening coordination with Palestinian diplomatic missions abroad and supporting national efforts was emphasized, along with discussing ways to enhance Palestinian presence in international forums and expand cooperation with financial institutions in friendly countries to support the resilience of the Palestinian financial sector.