The Palestinian government believes that the release of state cryptocurrency will reduce the country’s dependence on the Israeli shekel.
Palestinian Prime Minister Mohammad Shtayyeh recently announced that his government will use its own cryptocurrency to circumvent the sanctions imposed by Israel. Steye said:
“About 25 billion shekels are turning in the Palestinian economy, but we are not obliged to remain dependent on the shekel. ”
Staye promised to consider each option and do everything possible to find a way to economic freedom that Israel cannot block. The 1994 Paris Protocol gives the Palestinian Monetary Authority (PMA) the authority of the central bank, but the government has not yet been able to issue its own currency.
The agreement was signed by the Palestine Liberation Organization (PLO) and Israel in 1994, but states that the shekel will be used “as a means of payment for any purpose, including official transactions.” As a result, the Israeli Shekel is one of the major currencies in circulation, along with the Jordanian dinar and the US dollar.
In 2017, the PMA has already advanced
the idea of launching a national digital currency, and expressed the hope that the digital asset will be ready within the next five years. However, not everyone agrees that the release of the state cryptocurrency will change the economic situation.
Professor of Economics and Social Sciences at the University of Nadzha Bakr Shtaye (Bakr Shtayyeh) doubts that the cryptocurrency will be economically viable or practical for most Palestinians. Steyeh also doubts that the Palestinian cryptocurrency will make the country independent from Israel. Steye told Al-Monitor:
“If Palestine has its own currency, will it be able to prevent Israel from keeping funds to clear taxes or control the intersection and movement of exports and imports?” Will Palestine be able to enter into direct commercial transactions with neighboring countries without importing or exporting goods through Israeli trading ports? ”
In addition, which foreign parties or countries will actually risk violating international sanctions in order to make a deal with Palestine using its sovereign currency. Staye explained that in reality Israel will avoid Palestine’s cryptocurrency, and the country’s dependence on the shekel “will remain unchanged.”
Security is another issue worth considering, and Steyeh warned that cybersecurity, cyber attack capabilities and software development infrastructure are extremely advanced in Israel compared to Palestine.
Even if the Palestinian digital currency is fully developed, there is always a chance that it may be compromised by external cyber attacks. Steyeh suggests that the inclusion of Palestine in reducing trade exchanges with Israel and building special trade relations with neighboring countries would be a more realistic option.
Palestine is not the first country to consider cryptocurrency as a way to overcome international sanctions. Iran, Cuba
are actively studying this issue.