Discount Bank Cuts 5 Palestinian Banks Off Israeli Clearing, Threatening 53 Billion Shekels
Updated
Updated · sadanews.ps · Jun 23
Discount Bank Cuts 5 Palestinian Banks Off Israeli Clearing, Threatening 53 Billion Shekels
2 articles · Updated · sadanews.ps · Jun 23
Summary
Israel's Discount Bank has terminated correspondent services for five Palestinian banks, putting at risk the clearing channel that handles nearly 53 billion shekels a year.
That link underpins imports, remittances and day-to-day liquidity in an economy where most trade comes from or passes through Israel and most transactions are conducted in shekels.
Palestinian banks already hold more than 16 billion shekels in excess cash that is hard to settle, while the sector carries over $24 billion in assets, about $20 billion in deposits and more than $11 billion in credit facilities.
A prolonged disruption would likely raise import costs, slow transfers and tighten credit for businesses and households, even if ATMs and bank accounts continue operating initially.
The report says repeated Israeli Finance Ministry threats to withhold guarantees expose the lack of alternatives, increasing pressure on Palestinian authorities and banks to build regional correspondent links and digital payment channels.
Is Israel’s banking squeeze a risk-management move or a strategy to deepen Palestinian economic dependency?
With its main financial artery threatened, can Palestine's digital payment experiments scale fast enough to prevent economic collapse?
Banking on Instability: The 2026 Israel Discount Bank Cutoff and the Collapse of the West Bank Economy
Overview
In June 2026, Israel Discount Bank decided to cut its long-standing ties with Palestinian banks, immediately threatening the financial stability of the West Bank. This move, driven by growing regulatory and financial pressures—including new taxes and ongoing uncertainty in banking relationships—means essential services like salary transfers and customs payments are at risk. The situation was made worse by the Israeli Finance Minister’s practice of only granting short-term guarantees, leaving both Israeli and Palestinian banks exposed to legal and operational risks. As a result, daily economic life in the region now faces serious disruption and uncertainty.