Can Palestinians free themselves of the shekel?
The new government of Prime Minister Mohammed al-Shtayyeh would like to drop the shekel, which is not an easy proposition given the many ways the Israeli currency enters the Palestinian economy.
RAMALLAH, West Bank — On April 13, Palestinian Prime Minister Mohammed Shtayyeh made his first appearance on Palestine TV after taking office and pledged to seek alternative currencies for the Israeli shekel, putting his government to the test.
“The Palestinian economy has about 25 billion shekels [$7 billion] circulating in the local economy, but we are not forced to remain dependent on the shekel,” Shtayyeh said. “So one of the central issues we will be working on is forming a team to study dropping the shekel, either by resorting to an encrypted currency, digital currency or other options.”
Such talk about replacing the shekel is nothing new. In April 2014, the Palestinian Monetary Authority (PMA), which serves as Palestine’s Central Bank, threatened to resort to the US dollar or the Jordanian dinar as a temporary currency, when Israeli banks began refusing to take deposits from Palestinian banks after Abbas made Palestine a party to a number of international conventions and joined various UN agencies.
In January 2018, the Central Council of the Palestine Liberation Organization (PLO) voted in favor of ending the Palestinians' economic dependence on Israel, but no concrete actions have been taken in this regard. The following month, the Palestinian Authority (PA) government headed by Rami Hamdallah moved to establish a committee to study transitioning from the shekel to another currency and the possibility of issuing a national currency. The committee is yet to make any recommendations.
