US, European officials urge Israel to not sever West Bank from global financial system

Western officials sent a letter to the Israeli government, warning that Prime Minister Benjamin Netanyahu is risking an "economic catastrophe" in the occupied West Bank if it doesn't renew a waiver for international banks to maintain ties with Palestinian financial institutions.

The letter, spearheaded by US Treasury Secretary Janet Yellen, expresses concerns that Israeli Finance Minister Bezalel Smotrich will not renew the waiver that is set to expire on Thursday, The Financial Times reported.

"The actions taken by some members of your government to deny the West Bank access to financial resources endangers Israel's security and threatens to further destabilise the entire region," a copy of the letter says.

The letter was also signed by seven of Yellen's counterparts, including officials from the European Union and the United Kingdom, according to the Financial Times.

The Palestinian economy is based on the Israeli currency, the shekel, making it reliant on ties to Israel, and its financial dealings with the rest of the world must go through the Bank of Israel and other Israeli banks.

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