Following Israel’s digital shekel tests, the Palestinian Monetary Authority is also looking to launch its own central bank digital currency (CBDC), according to a Bloomberg report.
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Bound to agreements with Israel in the 1990s, Palestine does not have a currency of its own. Instead, the Israeli shekel is used as the de facto currency along with the Jordanian dinar and the US dollar.
The Chairman of the Palestinian Monetary Authority told Bloomberg Television that two feasibility studies are ongoing on the “Palestinian CBDC”.
Palestinian banks are prohibited from making large cross-border cash transfers, including to Israel, and are often forced to borrow money to cover remittances. The emerging CBDC is thought to address this issue.
However, experts say they doubt the viability of this CBDC, citing the weak local economy, Israel’s blocking of the free flow of goods and people, and the Palestinian reliance on remittances and foreign donations.