Israeli banks stop clearing shekel payments for Palestinian banks
The test Between 3 Nov 2026 and 3 Nov 2027, Israeli correspondent banks stop clearing shekel payments for Palestinian banks for at least 7 consecutive days, as reported by the Palestine Monetary Authority, the World Bank or two news agencies.
Not under way · Confidence: medium · Reviewed 3 Nov 2026 · Scores from 1 to 10
This page answers: What could happen, how it is scored, and who is exposed?
Using this page
- Read the two scores: Likelihood and Impact are kept apart.
- Check what is happening, each fact with its source.
- Use the calendar for the dates to watch.
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Impact is the average of the four parts, rounded, plus one point when Canada is directly hit on two or more channels, up to 10.
Two separate scales from 1 to 10. Strature never multiplies or merges them.
Why it matters
Palestinian banks clear shekel payments through two Israeli correspondent banks, which work under time-bound Israeli indemnity letters. The World Bank wrote in May 2026 that these letters are now often renewed for only two weeks and that any suspension of the links would likely have immediate destabilising effects. After both banks planned to end the service, they agreed in August 2026 to delay that until the end of 2026, leaving the decision to Israel's next government (Reuters).
Why Likelihood 5 Pushes: two-week renewals; an end-2026 deadline left to a new government. Brakes: every lapse so far averted by the Bank of Israel and Western pressure.
The other facts on file (4)
- Indemnity letters once renewed for six months to a year [1] (19 May 2026)
- Israel Discount Bank and Bank Hapoalim agreed to delay ending correspondent services until the end of 2026; a Bank of Israel deputy governor said the deadline was pushed off [8] (2 Sep 2026)
- NIS 16bn of surplus shekel cash at Palestinian banks in December 2025; bank exposure to the public sector about US$5.3bn, 42% of credit [1] (19 May 2026)
- World Bank: clearance revenue transfers suspended since May 2025; wages paid at 50-70% in 2025; flat NIS 2,000 for January 2026; withholdings and deductions disputed [1] (19 May 2026)
Where it sits
How it spreads
Sample, no data on file. No cited flows by country on file for this risk.
Between 3 Nov 2026 and 3 Nov 2027, Israeli correspondent banks stop clearing shekel payments for Palestinian banks for at least 7 consecutive days, as reported by the Palestine Monetary Authority, the World Bank or two news agencies.
Not under wayChannels 4 on the card
- CanadaNo Canadian loss sourced.
- Payments and tradeShekel payments for food, fuel and medicine would stall [3]; the World Bank names fuel, water and medical supplies [1].
- BanksBanks already hold trapped shekel cash and large public-sector exposure [1].
- Salaries and aidSalaries, customs and aid payments pass through the same channel [3].
Sectors 2
- Banks and insurers
- Agriculture and food
Countries 2
- Palestinian territories primary
- Israel
Who is exposed
No figure on file: Palestinian territories, Israel.
- Sectors
- Banks and insurers, Agriculture and food
Three scenarios and their signposts
- S1
Rolling renewals
Short waivers and the banks' service continue through 2027.
- S2
Lasting fix
A longer indemnity or a new clearing channel under international sponsorship.
- S3
Cut
A waiver lapses or a bank withdraws and clearing stops for a week or more.
| Path | Signpost |
|---|---|
| S1 | an extension announced before 31 Dec 2026 |
| S2 | an IMF or G7 statement on a mechanism |
| S3 | a PMA statement that transfers have stopped |
No probability is given for the three paths.
Dates to watch
The dates to watch
A dot is a day, a bar a month or a year; a hollow mark is tentative. The line marks today.
- 31 Dec 2026 Reported end of the waiver and of the banks' delay [8] Tentative · Window
- 3 Nov 2027 Date on which the event is judged [1] Declared · Strature date
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Connected in Strature
Sources
4 sources, numbered as the text cites them
- Economic Update on the West Bank and Gaza, May 2026. World Bank · 19 May 2026 · International body · confidence high · retrieved 3 Nov 2026
- Governor's address to the IMF Managing Director on correspondent banking relations. Palestine Monetary Authority · 13 Oct 2026 · Official · confidence high · retrieved 3 Nov 2026
- Flush with shekels they can't bank, Palestinian businesses look to the Israeli elections. Trade Finance Global · 28 Oct 2026 · News · confidence medium · retrieved 3 Nov 2026
- Israeli banks to continue working with Palestinians through 2026. Reuters (via Devdiscourse) · 2 Sep 2026 · News · confidence high · retrieved 3 Nov 2026
Reviewed 3 Nov 2026 · version 1 · last change: Likelihood 4 to 5 · All risks