Palestinian Monetary Authority
Overview
The Palestinian Monetary Authority (PMA) is the emerging central bank of Palestine. Established in 1994, the PMA is responsible for implementing monetary policies, ensuring the stability of the Palestinian economy, and regulating financial institutions operating within the Palestinian territories.
History
The PMA was established in 1994 following the signing of the Oslo Accords, which stipulated the creation of a Palestinian interim self-government. The PMA was initially set up as an autonomous body to supervise the Palestinian financial sector and to prepare for the establishment of a Palestinian state.
Functions
The PMA carries out several key functions. These include formulating and implementing monetary policy, regulating and supervising banks, and managing foreign exchange reserves. The PMA also issues and manages the Palestinian currency, the Palestinian pound.
Monetary Policy
The PMA's monetary policy aims to maintain price stability and to support economic growth. The PMA uses various monetary policy instruments, such as interest rates and reserve requirements, to influence the money supply and to control inflation.
Regulation and Supervision
The PMA regulates and supervises banks operating in the Palestinian territories to ensure the stability and integrity of the financial system. The PMA sets prudential standards for banks, conducts on-site inspections, and monitors banks' compliance with these standards.
Foreign Exchange Reserves
The PMA manages Palestine's foreign exchange reserves to ensure the country has sufficient foreign currency to meet its international financial obligations. The PMA also uses its foreign exchange reserves to intervene in the foreign exchange market to stabilize the Palestinian pound.
Challenges
The PMA faces several challenges in carrying out its functions. These include the lack of a fully sovereign state, the absence of a national currency, and the restrictions imposed by the Israeli occupation.
Future Prospects
Despite these challenges, the PMA has made significant progress in developing the Palestinian financial sector. The PMA is working towards becoming a full-fledged central bank and is preparing for the issuance of a national currency in the event of the establishment of a Palestinian state.