Israel cancels waiver allowing Israeli and Palestinian banks to work together
JERUSALEM: Israel canceled a waiver on Tuesday that had allowed Israeli banks to work with Palestinian ones, threatening to paralyze Palestinian financial institutions, Israel's finance ministry said in a statement.
'Against the backdrop of the Palestinian Authority's delegitimization campaign against the State of Israel internationally, Finance Minister Bezalel Smotrich has instructed Accountant General CPA Yahli Rotenberg to cancel the indemnity provided to correspondent banks dealing with banks operating in Palestinian Authority territories,' the ministry said.
Smotrich had threatened in May 2024 to cut the vital connection between Israel and Palestinian banks in the occupied West Bank in retaliation for the recognition of the State of Palestine by three European countries.
The Palestinian financial and banking system is dependent on the regular renewal of the Israeli waiver.
It protects Israeli banks from potential legal action relating to transactions with their Palestinian counterparts, for instance in relation to financing terror.
In July, G7 countries urged Israel to 'take necessary action' to ensure the continuity of Palestinian financial systems.
It came after US Treasury Secretary Janet Yellen warned that 'to cut Palestinian banks from Israeli counterparts would create a humanitarian crisis.'
The overwhelming majority of exchanges in the West Bank are in shekels, Israel's national currency, because the Palestinian Authority does not have a central bank that would allow it to print its own currency.
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