PMA Sounds Alarm and Urges Immediate Action as ILS Cash Accumulation in Palestinian Banks Reaches Breaking Point

The Palestine Monetary Authority (PMA) announced today that the crisis of Israeli Shekels (ILS) accumulation in Palestinian banks has reached a critical level, posing a serious threat to the continued financing of trade with or via Israel through official banking channels. Due to ongoing restrictions, Palestinian banks are no longer able to accept additional ILS cash deposits, as they are unable to transfer the surplus to Israeli correspondent banks.

The PMA stated that the accumulation of ILS in the Palestinian market has steadily increased in recent years, as the transfer limits imposed by the Israeli side have failed to keep pace with the natural growth of the Palestinian economy. As a result, Palestinian banks are unable to offload excess ILS or adequately replenish their accounts, undermining their ability to finance clearance payments, facilitate trade, and settle financial obligations between the two sides.

Furthermore, the PMA affirms that Palestinian banks have incurred — and continue to incur — substantial financial burdens due to their inability to transfer the ILS surplus. As a result, citizens are experiencing increased difficulties in conducting ILS-denominated transactions through the formal banking system. This has prompted some to convert ILS into Jordanian dinars or U.S. dollars, fueling the emergence of a black market for currency exchange.

The PMA warns that if this crisis persists, it will further strain the liquidity needed to finance trade, both domestically and internationally, and may lead to a deeper slowdown in economic activity across the State of Palestine.

The PMA also noted that it has engaged with all relevant parties in an effort to facilitate the transfer of the accumulated ILS surplus from the Palestinian market. However, these efforts have yet to yield positive results. The situation now demands urgent international intervention to secure a sustainable solution and to press the Israeli side to meet its obligations by permitting the transfer of ILS surplus.