Concerns of Palestinian economic crisis grow as Israeli banks prepare to cut ties
The banks process 51 billion shekels a year for the Palestinian Authority, and officials warn the cutoff could disrupt trade and payments.
- Israel Discount Bank and Bank Hapoalim will terminate correspondent banking services with Palestinian lenders on September 1 and October 1, respectively, citing risks of money laundering and terrorism financing.
- Israeli Finance Minister Bezalel Smotrich recently shortened legal indemnities protecting banks from litigation; delays in formalizing the extended waiver arrangement prompted the banks to notify Palestinian counterparts of termination plans.
- Correspondent channels process 51 billion shekels annually, supporting 90% of Palestinian trade. Palestinian Monetary Authority Governor Yahya Shinar warned that severing these ties disrupts supply chains and prevents companies from meeting essential financial obligations.
- During Thursday's meeting in Ramallah titled 'The Breaking Point,' representatives from the International Monetary Fund, World Bank, and United Nations warned the move could trigger severe economic crisis with profound consequences for regional stability.
- Collapse of formal payment channels could force commercial activity into informal cash markets, increasing financial crime risks while threatening to isolate the Palestinian economy further from the international financial system.
12 Articles
12 Articles
Israeli banks set to sever financial links with Palestinian banks, sparking payment fears
Israeli banks set to sever financial links with Palestinian banks, sparking payment fears Submitted by Fayha Shalash on Fri, 07/24/2026 - 09:54 Two Israeli banks cutting ties with Palestinian financial system could disrupt trade, salary payments, imports and financial transfers across occupied territories An Israeli man stands beside an automated teller machine at a Bank Hapoalim branch in Jerusalem, 1 May 2020 (Menahem Kahana/AFP) Off Israeli…
Al Arabiya
anews.com.trIsraeli banks to cut ties with Palestinian counterparts: Officials
Israeli banks have informed their Palestinian counterparts of their intention to put an end to essential services in the near future, raising fears of an economic crisis in the occupied West Bank.Israeli banks intend to stop the Israeli shekel loan to their Palestinian counterparts, citing the increasing risk of being exposed to prosecution in connection with these operations, but for several officials in the sector, it is mainly the increasing …
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