This effort will place the State of Palestine on the same list as other countries such as Venezuela, the Marshall Islands, the Bahamas, China and the latest endeavors of El Salvador, all of whom are interested in the power of blockchain to improve the efficiency of their financial infrastructure, and gain more independence from other economic powers.
Palestinian Sovereign Digital Currency: A Practical Solution or Just a Political Statement?
As is well known, the State of Palestine is occupied by the Zionist entity.
Palestine is recognized as an independent state by 138 out of 193 countries (the United Nations), the United States and Israel (two of its main political opponents) do not, and Israel currently exercises significant military and even financial control over the region.
In the image below, the countries in green recognize the State of Palestine:
And here comes the role of blockchain technology as a possible mitigation valve or perhaps a means of political protest by Palestine against Israel.
Palestine does not have its own currency, and instead relies on a mixed economy in which the Israeli shekel, the Jordanian dinar and the US dollar go in and out.
Therefore, with an economy controlled by a competing third party, it is almost impossible for Palestinians to enjoy any financial sovereignty when Israeli banks dictate their actions.
Currently, Israel prevents banks from conducting large cash transactions.
It also imposes restrictions on the amount of money Palestinians can transfer to Israel each month.
According to a Bloomberg report, this hinders financial transactions between Palestinians and could be one of the most important practical reasons for trying to create a sovereign currency free of Israeli influence.
As a result, Palestinians sometimes have to borrow to cover foreign exchange payments to third parties while they are stuck in a glut of Israeli banknotes.
This may be one of the reasons why digital currency is attractive to the Palestinian monetary system.
Experts don’t expect much:
The Palestinians and their Arab brothers may be optimistic, but many experts don’t see much hope in the Palestinian effort.
Among those who find it difficult to achieve is Raja al-Khalidi, director of the Palestinian Economic Policy Research Institute, who believes that it is virtually impossible for Palestinian cryptocurrency to see the light of day.
As there are no macroeconomic conditions to allow a Palestinian digital currency or otherwise to exist as a medium of exchange.
For his part, Barry Töpf, a former senior adviser to the Governor of the Bank of Israel, confirmed that this currency will fail to perform two main functions of money:
It will not replace the shekel, the dinar, or the dollar.
It certainly will not be a store of value or an accounting unit.
However, Palestine seems determined to pursue its digital currency project as it has nothing to lose.
Two studies on cryptocurrency are currently underway to help experts understand the landscape.
Ultimately, a great deal of the digital currency’s success will depend on the support it receives from other international bodies.