Israel’s central bank may use Israel’s Postal Bank to supply shekels to Gaza

Posted on September 26th, 2007 by Marian Houk

Reuters is reporting on Wednesday evening that the Bank of Israel is proposing to supply shekels to Gaza.

The story said that “Israel’s central bank has proposed using a state-owned institution to supply funds to Gaza banks after private lenders began severing ties to a territory that Israel labels an enemy entity, officials said on Wednesday. The anemic Gaza economy depends on Israeli shekels, long provided by Israeli commercial banks with a green light from the Israeli government, to finance imports, pay Palestinian Authority workers and carry out day-to-day transactions. Providing salaries to Chairman Mahmoud Abbas’s loyalists in the territory is part of a U.S.-led strategy, backed by Israel, to strengthen the Western-supported leader and weaken Hamas, which violently took over the Gaza Strip in June … Abbas’s government in the occupied West Bank uses shekels to pay salaries to tens of thousands of its employees in the Gaza Strip. It is unclear whether the Bank of Israel’s proposal to have the state-owned Israel Postal Bank take over Gaza transactions for the private banks will win Israeli government approval … Avi Hochman, president and chief executive officer of the Israel Postal Company, which includes the Postal Bank, said the proposal was developed earlier this week and presented to him by the Bank of Israel and Israel’s Finance Ministry. ‘We are considering it. There are some legal, logistical and operational issues that we have to find a solution to. Once we find a proper solution that will enable us to provide the services, we will be happy to provide them’, he told Reuters. He said the Israel Postal Bank has the financial capacity to fill the financial void left by Bank Hapoalim and Discount Bank. ‘Capacity is not an issue’, he said. The Bank of Israel declined to comment on the proposal. New shekels are needed in Gaza to replace those leaving the territory to pay for imports, mainly from Israeli suppliers. Without new shekels, Palestinian banks could run out of currency to cover deposits. A Palestinian banking official said the move could force Gaza banks to shut down”.
The Reuters story on the proposal to use the Israeli state-owned Postal Bank to bring shekels to Gaza is published here.

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