RAMALLAH, West Bank (AP) — Picture this: A customer at a gas station takes out a wad of cash to pay for a refueling. The cashier refused the cash and explained that the bank at the station was already overflowing with cash and had stopped accepting banknotes and coins for deposit.
Cash is important in most places. But under Israeli occupation west bankIf you have too much, the structure of your daily life will be disrupted. There are more Israeli shekels in the Palestinian banking system than it can manage. As a result, it has become difficult for residents to use banknotes and for businesses to deposit money into their accounts.
The excess liquidity stems from a conflict between the Bank of Israel and the Palestinian Monetary Authority, which oversees Palestinian banks and financial institutions. Israel limits the amount of physical currency it can take back from the West Bank. Palestinian officials say the cap has not kept up with growth and is a mechanism to keep the territory stable. state of economic crisis.
Unlike In Gaza, Years of near-total lockdowns have created cash shortages, and West Bank banks are running out of safe space to store bundles of shekels. With the Bank of Israel refusing to accept more banknotes and coins, commercial banks are unable to convert money into electronic balances to pay suppliers or process transfers on behalf of their customers.
Mohammad Manasra, deputy governor of the Palestinian Monetary Authority, said in an interview with The Associated Press that “banks are shackled” in their ability to deal with the crisis. “What is being waged in the West Bank is an economic war.”
More cash flowing into the West Bank than Israel allows
Central banks in most countries take cash back from commercial banks and deposit it electronically so they can settle payments and meet customer needs. But in the occupied West Bank, the economy is run differently, with Palestinians having no say in the financial policies that guide the shekel.
The territory has relied primarily on the Israeli shekel for decades; Israel To facilitate trade, collect taxes and process payments for imported goods under agreements dating back to the 1990s. The Palestinian economy operates almost exclusively on physical currency, with a cash glut accumulating as inflows from Israel outstrip the amount that can flow out.
why? Employers in Israel and its settlements pay cash to Palestinian workers, and Palestinians in Israel often buy goods such as cigarettes and fuel in the West Bank, bringing in even more shekels. As more cash flows in, the surplus locked up in Palestinian banks grows, earning no interest, making it impossible for them to make loans, invest, or pay their bills.
Israel’s cash transfer limit from the West Bank’s banking system is 18 billion shekels ($5.9 billion) annually. The bank currently accumulates an estimated 30 billion shekels a year, said Moayad Afaneh, an economist who advised the Palestinian Authority.
Israeli authorities have been reluctant in the past to accept more, citing concerns that returned funds could lead to money laundering, tax evasion and terrorism.
The Bank of Israel said in a statement that while it follows the current government’s policy on the amount it accepts, fewer Palestinians are working in Israel since the start of the Gaza war, leading to less cash flowing into the West Bank.
Israeli Minister of Finance Bezalel Smotrich ‘s office did not respond to requests for comment, but In September 2025 Smotrich threatened to “use every means” at his disposal to prevent the establishment of a Palestinian state, including “economic strangulation.”
Palestinians claim Israel is restricting them from receiving shekels as economic leverage
Israel imposed a series of measures countermeasure These effects have hampered the West Bank’s economy since the Gaza war began with an attack by Hamas-led militants in October 2023.
that Most work permits have been revoked For Palestinians working in Israel, their main source of income in the occupied territories has been cut off. It has withheld taxes and customs revenues collected on behalf of the Palestinian Authority, resulting in the inability to fully pay public sector workers, including teachers and hospital workers, for more than a year.
As the need for vaults increases, banks must pay to store and insure cash that cannot be withdrawn. Acceptance from businesses and households has declined, forcing them to find other ways to safely store their cash.
Manasra said the issue of excess shekels “directly impacts the government’s ability and the private sector’s ability to continue to serve key industrial sectors and the Palestinian people.”
As an example, he pointed out that most of the West Bank’s fuel and electricity is imported from Israel or purchased from Israeli power companies. When banks tie up too much of their assets in physical cash, they run out of money when customers like the Palestinian Authority and West Bank cities need to send money to import fuel, water and electricity.
Economist Afaneh said the problem was exacerbated by fears of looting by Israeli soldiers, whose raids on homes were becoming increasingly frequent. Palestinians are increasing their deposits in banks, fearing that soldiers will confiscate large sums of suspicious funds that could be used for illegal purposes or terrorism.
Having too much cash on hand also has a negative impact on a bank’s profits. This is because they are unable to lend out funds like most banks, which now lend electronically. 2022 International Monetary Fund survey The surplus cash is estimated to reduce the profits of Palestinian banks by about 20%, and Afaneh says this figure is likely to be even higher now.
Cash-based businesses in the West Bank have the funds but cannot pay their suppliers
At Al Huda Group’s Ramallah headquarters, cigarette smoke and tea steam waft through offices where clerks feed neat bundles of counted banknotes into machines that spit them out. The company operates gas stations, convenience stores, grocery and hardware stores, car washes and other businesses, and collects tens of millions of shekels each month.
Husni Jaber, executive manager of Al Huda Group, said the stockpile of funds that cash-based companies cannot deposit because banks are full is making daily operations and transactions more difficult and costly.
For example, some companies are taking out loans or purchasing other currencies to make electronic payments to Palestinian and foreign suppliers, while paying extra fees to safely store excess cash on hand, Jabbar said.
Some gas stations have to stop filling pumps if they can’t pay their suppliers. In a statement, the Palestinian Authority cited problems that caused the temporary closure of gas stations on Saturday.
Last month, many gas station operators staged a 30-minute strike across the West Bank, including at 22 gas stations run by al-Huda, to draw attention to the funding crisis. It did little to stimulate a response.
Mr. Jaber said he was concerned that corporate profits were stuck outside the traditional banking system and that a glut of cash would ultimately prevent West Bank companies from importing fuel, food and medicine from Israel and abroad.
“If the funding issue is not resolved, all sectors will collapse,” he said.
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Imad Isseid contributed reporting from Ramallah, West Bank.
