Israeli Finance Ministry extends cooperation with Palestinian banks

Israel Finance Minister Bezalel Smotrich has extended a waiver that allows Israel’s banking system to cooperate with Palestinian banks in the West Bank despite the existence of sanctions.

The waiver, which was due to expire at the end of June, allows Israeli banks to process shekel payments for services and salaries tied to the Palestinian Authority. Without it, the Palestinian economy would have taken a hit, Caliber.Az reports citing the Israeli media.

Smotrich extended the waiver by four months during a cabinet meeting on June 27 night.

United States Treasury Secretary Janet Yellen has said it was important to keep open the Israeli-Palestinian correspondent banking relationships to allow battered economies in the West Bank and the Gaza Strip to function.

The Palestinian economy relies heavily on this relationship to process transactions made in Israeli shekels. Some 53 billion shekels ($14 billion) were exchanged at Palestinian banks in 2023, according to official data.

Hamas launched an assault on southern Israel on October 7 that killed nearly 1,200 people and saw 251 taken hostage, sparking Israel’s retaliatory offensive in Gaza.