Palestine hopes to launch national digital currency in five-years

Palestinian officials consider ways to circumvent Israeli control and interference over currency supply by looking to digital models as part of a five-year strategy.

MENA

2 min read

The New Arab

14 May, 2017

Palestinians currently use four different currencies in Gaza and the West Bank [AFP]

Palestinian officials are preparing for the territories to have their own digital currency within five years, the head of the Palestine Monetary Authority said.

The move would potentially safeguard against Israeli interference in Palestinians producing and using their own currency.

At present, Palestinians in the West Bank and Gaza use the Euro, US dollar, Israeli shekel and Jordanian dinar.

The limited control that this current system gives Palestinian authorities over supply and inflation has led to bitcoin-style solutions being considered, PMA head Azzam Shawwa said.

"That is something we would like to see," Shawwa said on the sidelines of the annual meeting of the European Bank for Reconstruction and Development in Cyprus.

"It will be called the Palestinian pound."

The move to a Palestinian pound would be in line with the PMA's stated aim on its website, which says that it aims to become a "full-fledged and modern central bank for an independent Palestine."

Under the 1994 Paris Protocol agreement, the PMA was issued the functions of a central bank, however without the authority to issue currency. The protocol instead recommended that Palestinians use the Shekel and effectively gave Israel a veto over Palestinian currency.

Without the authority to produce hard currency, digital currencies have come to the forefront as a way to circumvent current restrictions.

"If we print currency, to get it into the country you would always need clearance from the Israelis and that could be an obstacle," Shawwa said. "So that is why we don't want to go into it."

With the Palestinians still amid a decade-long push to have a recognised central bank, the plans to launch a Palestinian pound are still some way off.

While the launch of a digital currency is currently the preferred option, other options, such as keeping the four-currency status quo or formally adopting one of them is also on the table, Shawwa said.

"But it's not only the currency, you have to see the economy also. Issuing a currency is something, but you also need the backbone of the currency; reserves, gold, oil, and that is part of the business plan," he added.

Despite the obstacles faced, the PMA is already in the process of moving to a purpose-built central bank building in Ramallah.

According to Shawwa, the new premises "is designed and constructed to be a central bank," complete with a secure vault.