This is the plan that the Palestinian Money Authority (PMA) are seriously considering amid concerns about potential interference from neighbours Israel. The two countries, already in conflict due to dispute over land, now find themselves in a situation where many Palestinians are moving to Israel to seek work that pays three times more than in Palestine.
Palestine has no sovereign currency which makes life very difficult for the PMA with their efforts to control money supply and inflation. Every day monetary transactions are carried out using a combination of currencies that include the Euro, US dollar, Jordanian Dinar and the Israeli Shekel.
Within five years the PMA, according to its Governor Azzam Shawwa, will change the way Palestine conducts business by introducing its own digital currency as new legal tender. This will be called the Palestinian Pound.
Paris Protocol Agreement – 1994
One stumbling block could be the 1994 Paris Protocol Agreement that authorised the PMA to act as a central bank but without the right to take this further and issue its own currency. The Paris pact also recommended using Israel’s Shekel providing Israel with some say in the future of Palestinian currency. No exactly the ball game that the PMA wants to play now. In their playground they want more say and more control over the country’s money supply and inflation without interference from Israel.
The reality of the situation is that a sovereign digital currency makes perfect sense for the PMA, who have no money printing presses lined to churn out a bunch of notes and coins which could be outdated quickly, creating a win – win situation for Palestine. Control and the avoidance of the challenges to provide hard currency for the country. A point highlighted by Azzam Shawwa who mentioned that to get currency into the country would need clearance from Israel which could be complicated.
The Palestinian Money Authority (PMA)
The PMA is an independent public institution responsible for the formulation and implementation of monetary and banking policies to try and maintain stability and low inflation, foster financial stability and safeguard the banking sector and promote sustainable growth of the national economy. PMA works to achieve these goals through:
- Development and execution of monetary policy designed to ensure low inflation and achieve price stability
- Effective and transparent regulation and supervision of banks, specialised lending institutions and money changers operating in Palestine
- Overseeing the development, implementation and operation of modern and efficient payment systems.
The PMA operates by an act of the Palestine Legislative Council’s PMA Law Number (2) of 1997, which stipulated the proper authority and autonomy of the PMA and the Banking Law Number 9 of 2010.
More to follow…