Addressing the ILS Accumulation Crisis / PMA Engages in a Series of Meetings with Government and Private Sector Stakeholders

Over the past two weeks, the Palestine Monetary Authority (PMA) has held a series of high-level meetings with representatives of key economic sectors, including the Federation of Chambers of Commerce, Industry, and Agriculture, to discuss concrete measures for advancing electronic payment adoption and mitigating the excessive accumulation of ILS liquidity within the domestic banking sector.

These discussions are part of the PMA’s continued efforts to advance its digital transformation strategy, which prioritizes the adoption of electronic payment systems as a primary channel for conducting financial transactions. This approach aims to promote greater transparency, enhance operational efficiency, and stimulate sustainable economic growth.

His Excellency, Mr. Yahya Shunnar, Governor of the Palestine Monetary Authority, provided Prime Minister Dr. Mohammed Mustafa and relevant ministers with a comprehensive briefing on the history and underlying causes of the ILS surplus crisis, which has significantly worsened since the events of October 7. He outlined the measures undertaken by the PMA to address the impact of the crisis, as well as the ongoing efforts, both locally and internationally, to intensify diplomatic and technical pressure on the Israeli side to enable the timely repatriation of ILS banknotes.

In addition, the Federation of Chambers of Commerce, Industry, and Agriculture, together with private sector representatives, reached an agreement, to enhance financial inclusion and expand the use of electronic payment services and point-of-sale (POS) systems across businesses and retails outlets. This shift aims to reduce dependance on cash transactions, thereby mitigating risks associated with theft and counterfeiting.

In parallel, the PMA has issued clear directives to banks, underscoring the importance of close cooperation with economic sectors responsible for supplying essential goods to the local market, facilitating foreign trade financing, and adopting a constructive approach when managing individual cash deposits.

The PMA urges all private sector institutions—including merchants, business, and service providers—to broaden the adoption of electronic payment methods and integrate them as a primary tool for daily transactions, thereby reducing dependence on physical cash. In parallel, the PMA also urges banks and electronic payment service providers to continue offering flexible and secure payment solutions for customers, such as digital wallets, mobile banking payments, credit cards, and modern point-of-sale devices. Institutions are also encouraged to fully leverage the capabilities of the instant payment system, iBURAQ, to enhance transaction efficiency and customer convenience.

In light of the Israeli side’s persistent refusal to cooperate and facilitate the repatriation of excess ILS banknotes from Palestinian banks to Israeli banks, the PMA is actively exploring a range of alternative measures to mitigate the ILS surplus crisis. Among these options is the potential shift toward adopting an alternative currency and reducing reliance on the ILS as the primary medium of exchange.