Israeli authorities have made significant progress in talks with a pair of banks to push off their imminent plans to stop providing correspondent banking services to Palestinian financial institutions, in what could collapse the West Bank economy, two sources familiar with the matter told The Times of Israel on Thursday.
Israeli banks Discount and Hapoalim last month informed their Palestinian counterparts that they would halt the provision of such services on September 1 and October 1, respectively.
The banks faulted the Israeli government, explaining that they had been assured roughly a decade ago that a new financial entity would be set up to assume the task of providing correspondent banking services to Palestinian banks.
Successive governments however dragged their feet on the matter, with finance ministers instead signing indemnity waivers meant to shield Discount and Hapoalim from possible legal liability.
Finance Minister Bezalel Smotrich began reassessing that policy as part of a host of steps aimed at weakening the Palestinian Authority. Over the past year, he signed waivers that only lasted for two weeks at a time.
