In an interview with Bloomberg, Milhem, governor of the Palestine Monetary Authority, said Palestinians are currently conducting two studies on the matter of digital currency. While a decision is yet to be taken, the intention is to eventually employ a digital coin “for payment systems in our country and hopefully with Israel and others to use for actual payments.” Palestine would join countries like China, Japan, Canada, and Russia in exploring a CBDC option.
Palestinians use the Israeli shekel as a de facto currency.
A digital currency issued by the Palestine Monetary Authority that would one day become the central bank of a Palestinian state could potentially provide the Palestinian financial system with a level of monetary independence from Israel. With the ’90s accords with the Israeli side, Palestinians don’t have their own fiat money but use the Israeli shekel as a de facto currency, alongside the Jordanian dinar and the U.S. dollar. As a result of various restrictions, including an Israeli law banning large cash transactions and monthly limits on shekel transfers back into Israel, Palestinian banks are now flooded with Israeli cash. Therefore a digital coin issued by PMA could benefit oppressed Palestinians.
PMA joins the list of other central banks in exploring CBDCs.
With its research on a state-backed digital currency, the PMA joins the list of central banking institutions around the world that have been exploring the possible issuance of a central bank digital currency in response to cryptocurrencies and declining use of notes and coins. These include the central banks of China, Russia, the U.S., and the Eurozone. However, it is important to note that Palestine’s economy is weakened and constrained by Israeli limitations hindering the free movement of goods, capital, and people. That’s why some experts have doubts on the feasibility of a Palestinian digital currency.