Overview
- On July 23 Palestinian and Israeli officials said Israel Discount Bank will stop correspondent services to Palestinian banks on Sept. 1 and Bank Hapoalim will follow on Oct. 1, creating firm near-term cut-off dates.
- The two banks process about 51 billion shekels a year for Palestinian clients and handle payments that settle most Palestinian trade, so the planned disconnection could halt imports of fuel, food, medicines and delay salary and government transfers.
- Israeli banks say rising exposure to private lawsuits and potential money‑laundering or terror‑financing liability makes the temporary finance‑minister waivers insufficient and they are pressing for a permanent legal guarantee.
- Palestinian officials warn the move could paralyse the PA’s finances already weakened by suspended customs transfers, while Jordanian banks could be left holding large unusable shekel balances and informal cash use may rise.
- Israel’s finance ministry is negotiating with the banks to find a solution, and international actors including the U.S. Treasury have previously urged maintaining the links to avoid wider economic and security fallout.