An official from the Palestine Monetary Authority recently told Reuters that there are plans for the Palestinian government to launch its own digital currency within the next five years. According to the head of the PMA, the introduction of such a currency could help to provide Palestinians with greater protection from Israeli interference in Palestine’s economy.
Palestine Monetary Authority Governor Azzam Shawwa revealed the plans in comments to Reuters at the European Bank for Reconstruction and Development (EBRD) annual gathering in Cyprus. Shawwa affirmed the government’s interest in developing its own cryptocurrency, noting, "That is something we would like to see. It will be called the Palestinian pound."
The Palestinian territory currently lacks its own currency. Instead, Palestinians conduct transactions using a collection of other currencies, including the U.S. Dollar, the euro, the Jordanian dinar, and the Israeli shekel. According to Shawwa, the existing currency dynamic has left Palestinian authorities with very little control over the amount of money in circulation throughout the territory, and thus few options for addressing important issues like inflation.
To realize their cryptocurrency goal, however, the Palestinians must first overcome several potential obstacles. The Palestinian Authority is still trying to gain recognition for a Palestinian central bank, and there are international agreements in place that could limit the Monetary Authority’s options. As Reuters notes, the 1994 Paris Protocol that enabled the PMA to function in the same way that other nations’ central banks operate also denied it the power to issue money.
That agreement also recommended the use of Israel’s shekel throughout Palestine, and provided Israel with the power to basically veto the introduction of any proposed Palestinian money. As Shawwa explains it, those controls are something that Palestine hopes to negate by choosing digital currency over printed money:
"If we print currency, to get it into the country you would always need clearance from the Israelis and that could be an obstacle. So that is why we don't want to go into it."