The Israeli newspaper The Marker said on Thursday that Palestinian banks will be isolated from the Israeli banking system, and from the entire world, starting next Monday, if the Israeli Prime Minister, Benjamin Netanyahu, does not hold a meeting of the mini-ministerial council for political and security affairs (cabinet) from In order to take a decision to circumvent Finance Minister Bezalel Smotrich, who decided to stop dealings between Israeli and Palestinian banks.

It is noteworthy that Discount Bank and Hapoalim Bank are the ones that implement the relationship between Palestinian banks and the Israeli banking system, as well as financial transactions between Palestinian banks and countries of the world, because the shekel is the currency circulating in the Palestinian economic system.

  Since 2009, the two Israeli banks have been demanding the cessation of relations with Palestinian banks, claiming that “Palestinian banks refuse to comply with regulations preventing money laundering and terrorist financing, which exposes the two Israeli banks to great risks because they guarantee Palestinian banks,” according to The Marker newspaper today, Thursday.

The Israeli government demanded that the two banks continue these transactions with Palestinian banks, and therefore took three steps. The first is the establishment of an Israeli government company that will be responsible for relations with Palestinian banks, but it has not begun work yet.

The second step is related to the two banks canceling two pledges: immunity from criminal lawsuits in Israel, and compensation for civil lawsuits filed against them. In the wake of the war on Gaza, the two banks demanded an increase in the amount of this compensation.

The Accountant General Department of the Israeli Ministry of Finance grants this compensation to the two Israeli banks, but its validity expires on March 31, that is, next Sunday. According to the newspaper, the Israeli government has not yet begun negotiations with the two banks regarding their demand for increased compensation, which means that transactions between them and the Palestinian banks will end on Sunday.

The newspaper explained that the failure to extend the validity of the compensation was due to Smotrich’s decision to punish the US administration, which imposed sanctions on settlers who participated in terrorist attacks on Palestinians, and to punish the two Israeli banks, “Discount” and “Hapoalim”, because of their implementation of the US sanctions.

After the US administration described these settlers as terrorists, all banks in the world that adhere to laws preventing money laundering and terrorist financing must stop the settlers’ financial activities. The two Israeli banks closed the settlers' accounts.

Stopping transactions between Israeli and Palestinian banks has serious consequences, including that any Israeli company that has commercial relations with the Palestinian Authority will not be able to deposit Palestinian checks or receive financial payments from Palestinian banks.

Likewise, Palestinian workers, who should receive their salaries through financial transfers to Palestinian banks and not in cash, will not receive their salaries through transfers but only in cash.

The newspaper added that the Palestinian Authority itself will be isolated from the global financial system and the Israeli economy, "which will lead to its collapse."

The newspaper added that the consequences of this for Israel would be “catastrophic,” because “it conflicts with the Israeli interest,” and this would lead to “an international boycott of Israeli banks, claiming that they are cooperating with the government in causing the collapse of Palestinian banks, and Israeli banks may find themselves subject to an international blockade.” “If this happens, the Israeli economy will collapse.”

According to the newspaper, on the other hand, there will be legitimacy for the Palestinian Authority to issue an independent currency and demand that the world recognize it. "This will be the first step towards world recognition of an independent Palestinian state."

The newspaper pointed out that the two Israeli banks are obligated to warn the Palestinian banks a month before severing relations with them, “but due to the enormous risks of filing lawsuits against them, it is estimated that the two Israeli banks would prefer to violate this clause with the Palestinian banks and sever relations immediately, since the beginning of the next week.”