Following in the footsteps of Israel’s recent digital shekel, the Palestinian Monetary Authority wants to launch its own central bank digital currency, according to Bloomberg report.
Bound by a 1990s deal with Israel, the Palestinians have no currency of their own. In contrast, the Israeli shekel serves as the de facto currency, alongside the Jordanian dinar and the US dollar.
The governor of the Palestinian Monetary Authority told Bloomberg Television that two feasibility studies of the Palestinian CBDC idea are underway, with the aim of using a future digital currency “for the payment system in our country and hopefully with Israel and others.”
Palestinian banks are prohibited from making large cross-border cash transfers including to Israel and are often forced to borrow money to cover remittances. It is hoped that the Palestinian CBDC can address this issue.
However, experts cast doubt on the feasibility of a Palestinian CBDC, citing an inherently weak local economy, Israel’s blockade of the free flow of goods and people, and the Palestinian Authority’s heavy reliance on remittances and foreign donor money.