The Palestinian economy is struggling. In the West Bank, the problem is too much cash - AP News

What the report says

The Associated Press reports that banks in the Israeli-occupied West Bank are struggling with an unusual problem: they have accumulated more physical Israeli shekels than they can move back into Israel’s banking system. The Palestinian Monetary Authority says Israel’s longstanding cap on accepting cash from Palestinian banks has left commercial lenders with limited vault space and less ability to turn notes and coins into electronic balances used for transfers, supplier payments and other routine financial activity.

The West Bank economy has relied heavily on the shekel for decades, under arrangements dating to the 1990s that leave Palestinians dependent on Israel for trade, tax collection and payment processing. AP says cash continues to enter the territory through wages paid to Palestinian workers and purchases by Palestinian citizens of Israel, while the amount Israel accepts back remains constrained. Economist Moayad Afaneh told AP that Israel’s annual transfer limit is 18 billion shekels, about $5.9 billion, while banks are now estimated to receive around 30 billion shekels a year.

The cash buildup is affecting daily commerce, with some banks reducing deposits from businesses and households because storage and insurance costs are rising. The Bank of Israel told AP it follows government policy on the volume of shekels accepted and said fewer Palestinians have worked in Israel since the Gaza war began, reducing cash inflows. Palestinian officials described the restriction as part of wider economic pressure.

AP places the dispute in the broader context of measures that have weakened the West Bank economy since the October 2023 Hamas-led attack and the war in Gaza, including reduced work permits and withheld tax revenues owed to the Palestinian Authority.