A recent scientific paper issued by Al-Zaytouna Centre for Studies and Consultations discussed the severe cash liquidity crisis afflicting the Gaza Strip, warning of the repercussions of financial separation on the unity of the Palestinian system. The study, prepared by researcher Raed Mohammed Helles, indicated that the ongoing war since October 2023 has extensively destroyed banking infrastructure, leading to unprecedented monetary imbalances in the local market.
The study clarified that the roots of the crisis are not new, but rather stem from structural factors accumulated over years, most notably an excessive reliance on paper currency and weak electronic payment systems. The destruction of bank branches and ATMs, along with communication outages, has led to a near-complete paralysis in citizens' ability to access their accounts and financial savings.
Research sources indicated that the cessation of traditional money flow channels had a catastrophic impact on the money supply, as money transfers from the West Bank and UNRWA staff salary transfers stopped. The prevention of workers from accessing their workplaces and the halt of arrivals from abroad also caused a drying up of liquidity sources that used to feed the markets in the Strip.
This severe shortage resulted in the emergence of serious economic distortions, most notably the rise of cash withdrawal commissions to record levels, burdening citizens. The study also observed a significant expansion of the informal economy and an increase in the phenomenon of hoarding money outside the official banking system, which deprived financial institutions of their ability to manage economic activity.
In light of these conditions, proposals have emerged calling for the adoption of a digital currency or a local electronic financial system as an alternative solution to overcome the paper currency shortage crisis. Supporters of this approach see it as an effective means to facilitate daily transactions and reduce the costs of money circulation amidst the imposed blockade and the destruction of traditional banking facilities.
Conversely, the researcher warned against treating digital currency as a purely technical solution, emphasizing that it carries political and institutional dimensions that could affect the future of the Palestinian entity. The study considered that establishing an independent monetary system in Gaza could lead to the permanent entrenchment of financial and political separation between the Gaza Strip and the West Bank.
The paper addressed the risks of weakening the regulatory role of the Palestine Monetary Authority, which would lose its ability to unify supervision over the financial sector. It also warned that digital transformation might open the door to high levels of external oversight and control over the economic activity of the population through non-national technological platforms.
On the technical front, the study confirmed that the current environment in Gaza does not provide the minimum requirements for the success of any large-scale digital financial project. The ongoing crises of electricity, communications, and internet represent a fundamental obstacle to the stability of digital systems and ensuring their continuous operation amidst the destruction of infrastructure.
The study also pointed to social challenges related to the limited digital financial literacy among broad segments of Palestinian society in the Strip. Added to this is the general lack of trust in electronic systems under complex security conditions, making it difficult to convince the public to fully transition to digital means.
Instead of rushing towards solutions that might further complicate the political scene, the study proposed a set of practical alternatives that operate within the framework of the existing financial system. It called for the necessity of pressing for the reactivation of channels for introducing paper currency into the Strip and rehabilitating damaged bank branches to return to service as quickly as possible.
The paper emphasized the importance of strengthening the role of the Palestine Monetary Authority in managing the crisis, while expanding the use of officially approved electronic payment methods. It considered that developing digital wallets under the Palestinian legal umbrella is the safest path to preserve the unity of financial institutions and prevent the emergence of parallel entities.
The study called for decisive measures to curb the monopolization of cash liquidity and combat the phenomenon of high commissions imposed by some unofficial parties. It believed that reactivating the monetary cycle requires cooperation between the public and private sectors to reduce the costs of financial transactions and facilitate the movement of funds among citizens.
In conclusion, the paper concluded that the liquidity crisis is one of the harshest consequences of the war and blockade, but its treatment should not come at the expense of national unity. It warned that any ill-considered step towards a separate digital currency could serve agendas aimed at permanently separating Gaza from the comprehensive Palestinian system.
The final recommendations emphasized the need to focus on reforming structural imbalances and rebuilding what the occupation destroyed within a unified national vision. Preserving the unity of the financial system remains the safety valve to protect the Palestinian economy from total collapse and ensure the continuity of financial services for all citizens without discrimination.
Establishing an independent monetary system in Gaza could directly impact the financial relationship between the Strip and the West Bank and the nature of existing Palestinian monetary supervision.
شارك برأيك
Study warns of financial separation risks: Is digital currency a solution to Gaza's liquidity crisis?