Palestinian Monetary Authority (PMA): The Palestinian central bank in the West Bank is reportedly developing a digital currency, which considers Israel’s symbolic monetary independence, Bloomberg reported Thursday.
Fereas Milhem, governor of the Palestinian Monetary Authority, revealed on Bloomberg Television that the authority hopes to use the central bank’s digital currency (CBDC) “for payment systems in the country.” The digital currency can function as the use of a real payment with Israel and others. Milhem further explained that the administration is currently studying two cryptocurrency approaches, but has not made any decisions yet.
Under the Oslo Accords signed in 1993, the Palestinians agreed not to issue their currency immediately. The West Bank and Gaza Strip-based political entity in the Middle East region primarily uses the Israeli shekel for daily transactions, alongside the Jordanian dinar and the US dollar.
However, Israel implements several laws in Palestine, restricting PMA-regulated banks from conducting a large number of cash transactions to prevent illegal money laundering activities and the implementation of currency control by limiting the amount of capital that Palestinian banks transferred to Israel monthly.
Therefore, the Palestinian economy is relatively weak. His community relies heavily on donations or remittances from Israel and sometimes borrows money to cover foreign exchange to third parties.
Palestine plays a vital regional role in geopolitics. The latest movement by the Palestinians is considered a significant symbolic movement, sending a political message to seek monetary independence.
However, regional experts doubt the feasibility of launching the Palestinian digital currency. Barry Topf, the former senior adviser to the governor of the Bank of Israel, believes that a Palestinian CDBC is unlikely to act as a medium of exchange.
“It is not going to replace the shekel or the dinar or the dollar. It certainly won’t be a store of value or a unit of accounting. “
Raja Khalidi, director of the Palestinian Economic Policy Research Institute also questioned the possibility, saying that “macroeconomic conditions do not exist to allow a Palestinian currency, digital or otherwise, to exist as a medium of exchange.”
Many countries or regions around the world are studying the implementation of CBDC to reform their monetary policy, while there are still many technical and legal challenges ahead.
However, El Salvador, the Central American country, this month has become the first nations to adopt Bitcoin as legal tender alongside US dollars. The government has recently requested the assistance of the Central American Bank for Economic Integration (CABEI).
Image Source: Shutterstock