Following Israel’s recent tests of a digital shekel, the Palestinian Monetary Authority is looking to launch its own central bank digital currency, according to a Bloomberg report.
- Bound by 1990s accords with Israel, Palestine does not have a currency of its own. Instead, the Israeli shekel serves as the de facto currency, alongside the Jordanian dinar and the U.S. dollar.
- The governor of the Palestine Monetary Authority told Bloomberg Television that two feasibility studies on the idea of a Palestinian CBDC were under way, with the goal of using a future digital currency “for payment systems in our country and hopefully with Israel and others.”
- Palestinian banks are prohibited from making large cross-border cash transfers — including to Israel — and are often forced to borrow money to cover remittances. It is hoped that a Palestinian CBDC may address that issue.
- Experts, however, doubt the feasibility of a Palestinian CBDC, citing the inherently weak local economy, Israel’s blockade of free flows of goods and people, and the Palestinian Authority’s heavy reliance on remittances and foreign donor money.