A cash surplus is upending the economy in the occupied West Bank

Key Points:

• The Palestinian banking system in the Israeli-occupied West Bank is overwhelmed with excess Israeli shekels, causing cash to become difficult to spend or deposit due to limits imposed by the Bank of Israel on physical currency returns.
• This cash surplus results from Israel restricting the amount of shekels it accepts back from the West Bank, a policy Palestinian officials view as economic warfare aimed at maintaining the territory's economic crisis.
• Banks in the West Bank face storage challenges and financial losses because they cannot convert physical cash into electronic balances, limiting their ability to lend and support payments for essential imports like fuel and electricity.
• The cash glut has disrupted business operations, with companies struggling to pay suppliers and some gas stations temporarily closing or striking to highlight the crisis.
• Israeli measures since the 2023 Gaza war, including revoked work permits and withheld tax revenues, have compounded the economic difficulties, exacerbating the cash management problem and threatening the stability of the West Bank economy.