GAZA CITY, Gaza Strip — The Palestinian Monetary Authority (PMA) is currently preparing to open the Palestinian Central Bank, as soon as Palestinian President Mahmoud Abbas signs the Central Bank of Palestine law. This comes as the PMA fulfilled the requirements for transitioning into an integrated central bank. The preparations included restructuring the PMA, building the Central Bank headquarters in Ramallah, developing Palestinian banks, developing new control systems and finalizing the Central Bank of Palestine law.

In 2006, the PMA drafted a strategic plan to establish a central bank in Palestine in order to achieve the monetary policy’s ultimate objective in the Palestinian state. But it faced several obstacles.

PMA Governor Azzam Shawa told Al-Monitor, “The PMA was originally formed as the nucleus of the Central Bank of the State of Palestine. The PMA law No. 2 of 1997 is bound by the provisions of the 1994 Paris Protocol, which made the Palestinian economy dependent on Israel, given the latter’s control over the crossings and ports. A strategic plan to convert to the central bank system was developed in 2006 with the assistance of experts in global central banks and international institutions.”

Shawa said that ever since the PMA was founded, it has been in the process of gradually shifting from an institution with responsibilities mainly limited to banking oversight and some traditional technical functions to an institution with broader competences. He explained that the PMA has always sought to become a full-fledged central bank, subject to the long-term monetary policy considerations, to achieve the ultimate goal of the future Palestinian state’s monetary policy.