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Residents queue at the ATM at the Bank of Palestine, Gaza. Photo/REUTERS/Abed Rahim Khatib
TEL AVIV – Palestinian banks could be cut off from the Israeli banking system starting next week following the Israeli Finance Minister's decision to stop transactions between the two financial institutions.
This news was according to a report on Thursday (28/3/2024) by the Israeli newspaper Haaretz.
Israeli Prime Minister (PM) Benjamin Netanyahu has two days to hold a cabinet meeting to discuss canceling Finance Minister Bezalel Smotrich's plan to isolate Palestinian banks from the Israeli and international banking systems.
The Palestinian economy is based on the Israeli currency, the shekel, so it relies on relations with Israel and its financial transactions with the rest of the world must go through the Bank of Israel and Israeli banks.
Earlier this month, right-wing minister Smotrich threatened to cripple the Palestinian Authority's economy in response to United States (US) sanctions against four extremist West Bank settlers accused of violence against Palestinians.
Israeli banks have complied with the sanctions despite calls from Smotrich not to comply.
Two Israeli banks, Israel Discount Bank and Bank Hapoalim, currently maintain Palestinian banks' relationships with the banking system in Israel and globally.
To protect them from lawsuits implicating the Palestinian Authority for “transferring funds to terror groups,” the Israeli government has issued protections for the two banks every year, which the finance minister signs off on.
Smotrich now refuses to renew the agreement that has been in place for years.