Digital Currency: Palestine sets to join the trend

The move for countries to adopt a digital currency is on the rise with Palestine joining. Although the move seeks to give the country some freedom over its finances, experts are sceptical about it.

Cryptocurrencies have resurfaced in the geopolitical landscape. According to reports, the Palestinian Monetary Authority is developing a digital currency as part of a goal to achieve greater financial independence.

This action would put Palestine on par with countries like Venezuela, the Marshall Islands, the Bahamas, China, and El Salvador’s most recent efforts, all of which are interested in using the blockchain to improve the efficiency of their financial infrastructure and gain a little more independence from other economic powers, while also bypassing their sanctions.

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The United States and Israel do not acknowledge its existence because of problematic scenario that has resulted in yet another military battle between Israel and Hamas (which controls Palestine, or the Gaza strip), and also Israel currently exercises military and even financial authority over the region.

And this is where the Palestinians see blockchain as a possible relief valve or a way to protest Israel politically. Palestinians do not have their own currency and rely on a mixed economy in which Israeli Shekels (ILS), Jordanian Dinars, and even US dollars are exchanged.

As a result, with an economy controlled by a competing third party, Palestinians’ financial sovereignty is very difficult to achieve when Israeli banks restrict their actions.

Banks are now prohibited from performing large cash transactions in Israel. It also sets monthly limits on the amount of money Palestinians can send to Israel per month.

According to a Bloomberg report, this obstructs financial transactions between Palestinians and may be one of the most practical reasons for attempting to establish a sovereign currency free of Israeli influence.

As a result, they [the Palestinians] sometimes have to borrow to cover foreign exchange payments to third parties and are stuck with a glut of Israeli banknotes. That could be one reason a digital currency would be attractive to the Palestinian monetary system.

Although Palestinians are hopeful, many analysts do not believe the Palestinian cause has much prospects. Raja Khalidi, the head of the Palestine Economic Policy Research Institute, is among those who feel that a Palestinian cryptocurrency would never 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.

For his part, Barry Topf, a former senior adviser to the Governor of the Bank of Israel, predicted that this currency would fail to fulfill two of money’s primary objectives.

“It’s not going to replace the Shekel or the Dinar or the US dollar. It’s certainly not going to be a store of value or a unit of accounting.”

Palestine, on the other hand, appears to be dead set on pursuing a risk-free venture.

Two cryptocurrency studies are now being conducted to aid specialists in their understanding of the market. In the end, a large part of its success will be determined by the support it receives from other international bodies, particularly other countries. 

The ultimate conclusion is that this is a topic for political experts, not crypto fans, to debate.