A spokesman for the Israeli Finance Minister said on Sunday that the minister extended a grace period allowing cooperation between the Israeli banking system and Palestinian banks in the occupied West Bank, according to what Reuters reported.

The grace period, which was scheduled to expire at the end of this June, allows Israeli banks to accept payments in shekels for services and salaries linked to the Palestinian Authority.

The spokesman added that Finance Minister Bezalel Smotrich extended the exemption during a recent cabinet meeting.

US Treasury Secretary Janet Yellen said that it is important to maintain mutual banking relations between Israel and the Palestinians, so that the faltering economy in the West Bank and Gaza Strip continues to function and to help achieve security.

The Palestinian economy relies heavily on this banking relationship to conduct transactions in shekels.

Official data show that about 53 billion shekels ($14 billion) were traded in Palestinian banks in 2023.

Israel had threatened to cut ties with Palestinian banks as a retaliatory measure if European countries implemented their decision to recognize the State of Palestine.

Israel banned bank transfers immediately after the outbreak of the war on Gaza.
Under the Oslo Accords, Israel raises money for the Palestinian Authority, which exercises limited self-rule in parts of the West Bank that Israel has occupied since 1967.