Palestine is trying to create its own digital currency to gain more freedom over its finances but the experts are still skeptical about the new adventure as we are reading more about it in our latest cryptocurrency news.
Crypto is back on the geopolitical scenario and the Palestinian Monetary Authority is working on issuing a digital currency as a new strategy to achieve a new level of financial independence. The effort will place Palestine on the same list as other nations like the Marshall Islands, Venezuela, China, Bahamas, and the latest endeavors of El Salvador that are also interested in the power of the blockchain to boost the efficiency of the financial infrastructure and gain more independence from other economic powers by simply bypassing their sanctions.
Palestine has a peculiar political situation whereas 138 of the 193 United Nations recognize it as an independent country with Israel and United States do not recognize the existence and Israel currently exercises important military and financial control on the region. This where the blockchain comes in hand as a relief valve or as a means of political protest by Palestine against Israel. Palestine doesn’t have its own currency but it also relies on a mixed economy where Israel shekels and US dollars move in and out. So with the economy controlled by the rival third party as it is almost impossible for the Palestinians to have more financial sovereignty when the Israeli banks dictate their movements.
Right now, Israel prohibits banks from conducting large cash transactions and imposes limits on the amount of money that people from Palestine are able to transfer to Israel every month. According to a recent report, it hinders the financial transactions between Palestinians and could be one of the most important practical reasons and try to create a new sovereign currency free from Israeli influence.
As a result, the Palestinians have to borrow to cover foreign exchange payments to the third parties and are stuck with a glut of the banknotes of Israel. This could be one reason a digital currency will be attractive to the Palestinian monetary system. Palestinian could be optimistic but most experts don’t see much hope for the efforts of Palestine and among this group is Raja Khalidi who is the director of Palestine Economic Policy Research Institute who think that it is basically impossible for the Palestine crypto to see the light of day:
“The macroeconomic conditions don’t exist to allow a Palestinian currency — digital or otherwise — to exist as a means of exchange.”
Barry Topf who is the former senior adviser to the Bank of Israel governor assured that this currency will not fulfill two of the main functions of money:
“It’s not going to replace the shekel or the dinar or the dollar. It’s certainly not going to be a store of value or a unit of accounting.
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