Palestine: Moving Cash In Times of War

The Israel–Hamas war began on 7 October 2023 when Hamas launched an unprecedented assault on Israel from the Gaza Strip, killing more than 1,300 Israelis and foreign nationals, primarily civilians, and abducting hundreds of hostages. Israel formally declared a state of war on 8 October and, after weeks of heavy airstrikes, launched a large-scale ground assault on 28 October. On 24 November, a ceasefire came into effect. It lasted seven days and saw the release of hostages and Palestinian prisoners, as well as much-needed humanitarian assistance reaching the Gaza Strip.

According to the Financial Times, a unique and challenging mission in North Gaza occurred during the brief truce. The objective was to retrieve approximately 180 million shekels (equivalent to $50 million) in cashMoney in physical form such as banknotes and coins. More from two Bank of Palestine branches in heavily damaged areas. The cash, stored in 200-shekel notes, weighed nearly a ton. The “ConOps-Gaza” mission was crucial to addressing the growing cash shortage in southern Gaza, where most of the population had sought refuge and humanitarian aid efforts were concentrated.

The operation involved extensive planning, requiring UN backing, security measures, clearance from Israel, and a level of secrecy due to the sensitive nature of the mission. The banknotes, totaling around 900,000 pieces, were successfully transported to southern Gaza and are now available for circulation. The challenging circumstances rendered the operation surreal and essential.

Since the war broke out, the broader economic context in Gaza has been dire, with the region facing severe cash shortages, soaring prices, food shortages, and continuous threats of bombing. Bank staff have been struggling to ensure access to cash, even resorting to covertly moving cash between branches and ATMs. The ongoing conflict exacerbates the difficulties faced by the Palestinian banks in the cash-dependent economy. The economic crisis is further intensified by the unique situation in Gaza, where a significant portion of the population relies on international aid. However, as often seen in disaster situations, markets still function in some form or another.

Before the conflict, Gaza’s economy was already strained, with a high poverty rate and a significant dependence on international assistance. The region was heavily dependent on cash as most Palestinians are unbanked. According to the World Bank’s Global Financial InclusionA process by which individuals and businesses can access appropriate, affordable, and timely financial products and services. These include banking, loan, equity, and insurance products. While it is recognised that not all individuals need or want financial services, the goal of financial inclusion is to remove all barriers, both supply side and demand side. Supply side barriers stem from financial institutions themselves. They often indicate poor financial infrastructure, and include lack of ne... More database in 2021,

• 33.6% of Palestinians aged 15 and older had an account at a financial institution,
• 21.4% of the target population had at least one debit card, and 3.6% had a credit card,
• 20.9% had made or received digital payments.

The current situation has led to even more challenging circumstances, with disruptions in wage payments, increased borrowing, and a lack of basic goods. The Palestinian Monetary AuthoritySee Central Bank More has issued instructions to provide loans, extend emergency funds, and implement measures to alleviate the economic impact.

Despite these efforts, access to cash remains challenging, dependent on electricity and internet availability. ATMs often do not function during frequent blackouts, further complicating the economic situation for residents. Individuals and families not only face the immediate dangers of the conflict but also anticipate a bleak future of loss and hardship, with destroyed homes, economic uncertainty, and concerns about repaying loans in the aftermath of the war.

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