The Palestine Monetary Authority (PMA) issued an alert that the accumulation of Israeli shekels (ILS) in Palestinian banks has reached a critical level, threatening the ability to finance trade with or via Israel through official banking channels. With banks unable to transfer surplus ILS cash to Israeli correspondent banks due to ongoing restrictions, Palestinian banks have stopped accepting additional ILS cash deposits. The PMA linked the buildup to transfer limits imposed by the Israeli side that have not kept pace with growth in the Palestinian economy, leaving banks unable to offload excess ILS or adequately replenish accounts. It said this is undermining the financing of clearance payments, trade facilitation and the settlement of financial obligations between the two sides, while imposing substantial ongoing financial burdens on Palestinian banks and making ILS-denominated transactions harder for citizens, contributing to conversions into Jordanian dinars and US dollars and the emergence of a currency exchange black market. The PMA warned that continued disruption could further strain liquidity needed to finance domestic and international trade and deepen the slowdown in economic activity across the State of Palestine. It said engagement with relevant parties has not yet produced results and called for urgent international intervention to secure a sustainable solution, including pressing the Israeli side to permit transfers of accumulated ILS surplus.

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