Finance Minister Bezalel Smotrich has announced the extension of a waiver that allows cooperation between Israeli banks and Palestinian banks in the West Bank. The waiver, which was set to expire at the end of June, enables Israeli banks to process shekel payments for services and salaries tied to the Palestinian Authority. This extension comes in response to the concerns raised by US Treasury Secretary Janet Yellen, who emphasized the importance of maintaining Israeli-Palestinian correspondent banking relationships to support the economies in the West Bank and the Gaza Strip. The Palestinian economy heavily relies on this relationship to process transactions made in Israeli shekels, with approximately 53 billion shekels ($14 billion) exchanged at Palestinian banks in 2023. The extension of the waiver was announced during a recent cabinet meeting [a1a194ff].
The G7 finance leaders had previously issued a statement calling on Israel to maintain correspondent banking links between Israeli and Palestinian banks. The statement emphasized the importance of these links in allowing vital transactions, trade, and services to continue. It also urged Israel to release withheld clearance revenues to the Palestinian Authority and highlighted the need for the removal or relaxation of other measures that have negatively impacted commerce in the West Bank. This statement aligns with the concerns raised by US Treasury Secretary Janet Yellen, who warned that failing to renew the soon-to-expire banking waiver would cut off a critical lifeline for the Palestinian economy, particularly amid the ongoing conflict in Gaza [8cc84f62].