Gaza Herald — As Ramadan begins, Gaza is facing an escalating liquidity crisis driven by ongoing restrictions on the entry of cash, leaving the banking system largely paralyzed and residents unable to access their own savings to cover basic needs.
Despite holding funds in their accounts, hundreds of thousands of Palestinians cannot withdraw or use their money. Banks have suspended nearly all cash withdrawals and deposits, limiting services to administrative functions, while physical currency has become increasingly scarce across the territory.
Digital banking solutions and mobile wallets have offered little relief. Much of Gaza’s economy, particularly street vendors and informal markets, continues to rely heavily on cash transactions, making electronic alternatives insufficient in practice.
The shortage of newly issued banknotes has forced residents to rely on worn and damaged currency. In response, informal repair stalls have emerged in local markets, where individuals tape and reinforce torn bills in an effort to keep them in circulation, as many merchants refuse to accept severely damaged notes.
Now in its third year, the crisis first emerged during the early months of the war, when cash rapidly disappeared from circulation and restrictions prevented the entry of new funds. This has placed mounting pressure on an already fragile financial system.
The destruction of bank branches and ATMs has further limited access to financial services, making the use of bank cards impractical in many areas.
According to United Nations data published last September, restrictions on the entry of new currency have contributed to a severe liquidity shortage, rising living costs, and declining purchasing power. The UN has also warned that the war has pushed the majority of Gaza’s approximately two million residents into poverty amid widespread economic collapse and unemployment.
A banking official, speaking anonymously, said many residents have already lost significant portions of their savings, while the value of money has steadily eroded during the war.
Long queues outside bank branches have become a common sight, even though banks are unable to provide cash services. Many residents also face high fees to convert money transfers from abroad into physical cash, reducing the value of funds sent to support families.
Economic researcher Ahmed Abu Qamar described the banking sector as among the hardest hit, estimating that rebuilding financial infrastructure will cost more than $42 million. He added that financial transfer restrictions have intensified, with some transactions rejected or accounts restricted, further complicating access to funds.
Abu Qamar estimates that losses in credit and cash assets have exceeded $325 million over the past two years, highlighting the scale of damage to Gaza’s financial system.
He warned that continued restrictions on liquidity have contributed to the emergence of informal cash markets, where access to physical currency comes at a higher cost, placing additional strain on residents already struggling to survive.
