Since it has no right to print paper money, the Palestinian Central Bank plans to issue digital currency based on Bitcoin

Palestinian officials plan to launch their own digital currency within five years in an effort to prevent potential Israeli-Palestinian conflict, the Palestine Monetary Authority (PMA) told Reuters.

As a country without an official currency, Palestinians use euros, dollars, Israeli shekels and Jordanian dinars in their daily lives.

However, due to the inability to control the money supply, inflation is a common phenomenon in Palestine, so Azzam Shawwa said the government began considering a solution based on Bitcoin.

This is one option we would like to see, and it would be called the Palestinian pound.

Bitcoin is a global digital currency and payment system.

Shawwa spoke to Reuters at the European Bank for Reconstruction and Development (EBRD) annual meeting in Cyprus.

The PMA states on its official website that its goal is to become a "mature, modern central bank" that serves every independent Palestinian people.

However, it is unclear how the planned e-pound would address obstacles posed by the 1994 Paris Agreement, which gave the PMA central bank functions but did not allow it to issue currency, and recommended that Palestine use the Israeli shekel, over which Israel has a veto.

There are practical reasons why Palestine is considering issuing a digital currency. The country’s central bank does not have the equipment to print money, so all its money comes from other countries. Shawwa said:

After the currency is printed, it must be approved by Israel before it can be used domestically, which is definitely a hindrance. So we don't want to take this approach.

Palestine is not the only country considering issuing a digital currency. Sweden’s central bank has said it may issue an electronic currency as cash usage declines and low interest rates offered by banks force people to keep their cash in safes or at home.

However, the Palestinian pound is still a long way off. Shawwa said the central bank has been fighting for nearly a decade to gain recognition, and the currency plan will be detailed by the end of this year as part of its five-year development strategy.

Palestine has other options, such as maintaining the current status of using four national currencies or officially adopting one, but Shawwa said that digital currency is currently on their priority list.

It’s not just the currency, the economic situation should also be taken into consideration. Issuing (currency) is important, but at the same time, currency also needs some pillars, such as reserves, gold, crude oil, etc., which is also part of our business plan.

Now, they have taken the first step. Shawwa said that PMA is transforming into a new central bank.