West Bank and Gaza: Selected Issues

International Monetary Fund

No 2022/299, IMF Staff Country Reports from International Monetary Fund

Abstract: For more than a decade, commercial banks in West Bank and Gaza (WBG) have struggled to manage buildups of excess physical Israeli shekel cash. Banks elsewhere typically manage the amount and currency composition of physical cash they hold in their vaults through transactions with other commercial banks and central banks. However, citing money laundering and terrorism financing (ML/TF) concerns, the two Israeli banks that currently offer correspondent services to banks operating in WBG no longer offer them cash services. The Bank of Israel (BoI) has imposed limits on the amount of shekel coins and notes it accepts back from Palestinian banks. This has long hindered liquidity management and been a drag on the profitability of Palestinian banks, but periodic large increases in excess cash in recent years have created additional risks and raised the costs to the Palestinian banking system.

Keywords: cash shipment; shekel cash; excess cash; cash in West Bank; Palestinian banking system; Commercial banks; Correspondent banking; Anti-money laundering and combating the financing of terrorism (AML/CFT); Financial inclusion; Middle East; North Africa; Global (search for similar items in EconPapers)
Pages: 12
Date: 2022-09-16
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