Months after Palestine’s current government was sworn in, the prime minister has revealed plans to develop a cryptocurrency meant to reduce dependence on Israel.
According to the Anadolu Agency, Palestinian Prime Minister Mohammad Shtayyeh stated that the digital currency will assist the territory to overcome the challenges currently being experienced as a result of the overreliance on the Israeli shekel. In a (loosely translated) statement, Shtayyeh said that this was part of the Palestinian National Authority’s e-government plans.
We are working to transform e-government into a reality that citizens feel.
The prime minister did not, however, provide details including when the digital currency is likely to be launched.
Besides the Israeli shekel, Palestinians also use the U.S. dollar, the euro and the Jordanian dinar. However, the Israeli Shekel dominates as it is the official currency in the Palestine territories based on the 1994 Paris protocol. Currently, there is a surplus of Israeli Shekels in the Palestine territories amounting to over NIS 4 billion ($1.13 billion), per the Jerusalem Post.
The surplus is as a result of a new Israeli law which has prohibited the use of cash in paying wages and conducting financial transactions for amounts exceeding NIS 11,000. The law is meant to curb money laundering and tax evasion among other ills. This law has led to banks in Palestine accumulating excess cash in their vaults.
Prime Minister Shtayyeh’s plan for a digital currency for the Palestine Territories is, however, not a new idea. A little over two years ago Palestine Monetary Authority (PMA) announced plans to launch a digital currency within half a decade.
At the time, the Governor of the PMA, Azzam Shawwa, announced the move would allow Palestine more control over money supply.
If we print currency, to get it into the country you would always need clearance from the Israelis and that could be an obstacle. So that is why we don’t want to go into it.
While the 1994 Paris protocol designated the PMA as a central bank, the body cannot issue currency thereby severely restricting its ability to control monetary policy. Per Shawwa the new e-currency will bear the name of Palestine’s currency between 1927 and 1952:
That is something we would like to see. It will be called the Palestinian pound.