It feels like money is melting’: In Gaza, a cash crisis makes daily life harder, fuels talk of cryptocurrency

Palestinians buy vegetables at the al-Zawiya Market in Gaza City during Ramadan in February 2026

Nagham Zbeedat reports in Haaretz on 2 March 2026:

In Gaza today, money often exists only in theory.  “A crisp $100 bill is not one hundred dollars,” said Abu Mahmoud, a vegetable stall owner in al-Zawiya market in central Gaza. “The highest you get for it [if you exchange it] is 250 shekels. Sometimes less.”

At the current exchange rates, $100 should amount to at least 310 shekels. But in Gaza’s fractured wartime economy, exchange rates have become meaningless. The real value of money is determined by scarcity, risk and the physical absence of cash.

After two years of war that decimated infrastructure, displaced the vast majority of Gaza’s 2.2 million residents and shattered its banking system, the enclave is facing an ongoing liquidity crisis. Since the start of Ramadan, traders, aid workers and residents say the shortage of physical currency has worsened. Prices are rising not only because of the scarcity of goods, but because cash itself is scarce.

And only three days into the US.-Israel war with Iran, all crossings into Gaza are closed again, causing an immediate shortage of fuel and food staples, that is expected to worsen the situation.

The crisis has grown so acute that, according to recent news reports, the newly formed Board of Peace, tasked with spearheading Gaza’s reconstruction, is exploring the possibility of introducing a stablecoin pegged to a mainstream currency such as the U.S. dollar. The goal, officials familiar with the discussions reportedly said, is to create a digital payment system that could stabilize transactions in a territory where banks barely function and cash is both king and an endangered species.

But on the ground in Gaza, the theory of cryptocurrency collides with the reality of patchy internet – thanks to damaged infrastructure and electricity shortages – and banned digital wallets.

Abu Mahmoud’s stall sits between a flour vendor and a makeshift table stacked with canned beans. The market is loud, but the conversations about money are whispered.

Broken Arab Bank ATMs in Gaza City in July 2025.

“People try to collect coins rather than bills,” he says. “Because coins are worth more. They are needed.” He explains the hierarchy that has emerged in this new cash-scarce economy: coins are more valuable because you can get exact change. When it comes to bills, small denominations are prized over large ones for the same reason – the vendor is more likely to be able to supply change. Clean-looking notes are shunned because vendors are suspicious that they may be counterfeit.

“If you want to buy something for 70 shekels with notes, they will ask you to buy more,” Abu Mahmoud says. “Because they don’t have change to give you back.”

In a bizarre turn of events, another factor impacting the situation on the ground, according to Abu Mahmoud, is the fact that the 10 shekel coin has effectively lost its value. At the beginning of the war, rumors spread that some coins were fake, damaged or contaminated. Now many vendors won’t accept them at all.  “Kids play with the 10-shekel coin,” Abu Mahmoud says. “Like marbles.”

According to data from international organizations operating in Gaza, large portions of the banking system have been damaged or rendered inoperable since October 2023, making it hard to retrieve cash. ATM networks have frequently gone offline due to power cuts, lack of cash deliveries or physical destruction. Banks that remain open often impose strict withdrawal limits. Residents describe lining up for hours only to be told there is no cash available.

“We live in a place where you can have money in your account and still not be able to touch it,” Abu Mahmoud says.

In response to the shortage of physical cash, many Gazans have turned to digital alternatives such as payment apps, mobile transfers and, increasingly, cryptocurrencies such as USDT, a stablecoin pegged to the U.S. dollar.

But digital solutions come with their own cost. “To withdraw USDT [from the app into your account] the fee is 12 percent,” Abu Mahmoud says. “From PayPal, it’s 18 percent.”

“These are big numbers for us,” says Shihab Abed al Qadir, 28. Abed al Qadir used to work as a carpenter in a small workshop. The building was damaged in an airstrike; the business never reopened. Since then, he has relied mainly on money wired from relatives outside Gaza. “If my cousin sends me $200, I lose more than $20. This is food for days.”

There is also the problem of Gaza’s limited internet access which means that residents cannot always rely on being able to access funds digitally. That said, banks in the Strip have come up with a solution to overcome this particular hurdle, establishing phone-based systems that allow people to make transfers without the need for an internet connection.

These different methods – some informal banking, some digital workarounds – have helped keep families afloat. But they operate in legal gray zones and are vulnerable to disruption.

At the beginning of the war, several residents reported that their digital wallets were suddenly frozen or banned. Some said international platforms flagged transactions originating from Gaza as high risk. Others said Israeli financial controls tightened sharply, complicating cross-border transfers.

Broken Arab Bank ATMs in Gaza City in July 2025. Credit: Jehad Alshrafi/AP
“We don’t know if tomorrow our wallet will be closed,” Abed al Qadir says. “So even digital money is not safe.”

A financial expert based in the West Bank, who requested anonymity, described Gaza’s current situation as “a textbook case of liquidity collapse in a conflict economy.”  “In simple terms,” he says, “liquidity refers to the availability of physical cash and the ease with which people can convert assets into usable money. In Gaza, both have been severely disrupted.”

He outlined three overlapping dynamics: physical destruction of banking infrastructure, restrictions on the movement of currency into the Strip and heightened risk perceptions among financial institutions.  “When a territory is cut off, cash inflows become irregular,” he explains. “At the same time, people hoard what they have. This reduces circulation. Even if nominal money exists in bank accounts, it does not function as money if it cannot be withdrawn.”

The result is a parallel market where exchange rates deviate sharply from official benchmarks. The $100 bill worth 250 shekels in the market is a symptom of what he calls “forced discounting under distress.”

When asked about cryptocurrency, he was cautious.  “In theory, a stablecoin pegged to a major currency could provide transactional stability,” he says. “However, this assumes reliable internet access, regulatory clarity and trust in the issuing authority. In Gaza’s current environment, these conditions are far from guaranteed.”

Beyond the technical questions lies a political one. Money is not only a medium of exchange; it is a mechanism of governance. Digital currency administered by a governing reconstruction authority could streamline aid distribution, reduce the need for physical cash transfers and limit black-market exchange by creating a unified ledger of transactions.

But it could also enable surveillance and conditionality.

And there is another aspect to consider. Gaza does not issue its own currency; instead, it relies primarily on the Israeli shekel, with more limited use of U.S. dollars and Jordanian dinars. In this context, some argue that introducing a locally managed stablecoin would represent more than a technical financial innovation – it could serve as a symbolic step toward greater economic self-determination and claims to sovereignty.

Others, however, contend that adopting a separate currency framework could deepen the economic and political divide between Gaza and the West Bank, potentially making the prospect of a unified Palestinian state even more remote.  For now, the proposal remains in its early stages with many of the details still to be agreed upon.

On the ground, however, the crisis continues

In recent weeks, the prices of goods have increased further as demand increases due to Ramadan. And since Saturday, the new Israel-U.S. war with Iran means prices are rising sharply as residents stock up. Israel has stated that the crossings cannot be safely operated during wartime, and would not say how long they would be shut.

Traditionally, the holy month of Ramadan is a time of joy. This year, as in recent years, the atmosphere is heavy.

Tasnim Izzat, 26, cradles her toddler as she describes trying to buy groceries for iftar. “I went to buy rice and oil,” she says. “The price changed twice in one week. And when I gave 100 shekels, the shopkeeper told me he could not give me change.”  She ended up buying more than she planned, not because she could afford it, but because she could not afford to lose the difference. “It feels like money is melting,” she says. “You hold it, but it becomes less.”

Izzat’s husband was injured early in the war and cannot work regularly. She manages the household budget and receives occasional remittances from a brother abroad.

“When the money comes in online, we are happy,” she says. “But then we think: ‘how much will we lose to withdraw it?'”  Withdrawal fees that families like Izzat’s are forced to pay mean the difference between whether there is meat on the table or not, whether medicine can be purchased or whether a child’s shoes can be replaced.

Against this backdrop, the reported plan to introduce a stablecoin has sparked both curiosity and skepticism.  “Sometimes we don’t have the internet for hours,” Abed al Qadir says. “If my money is only digital, how do I buy bread?”

There is also the memory of frozen wallets. “At the beginning of the war, some people’s accounts were banned,” he says. “If this new system comes, can they block it? Who can see what we buy?”

Abu Mahmoud was blunter. “If they give us crypto but no electricity, what do we do with it?” he asked. “Cook it?”

Still, the desperation is such that some are willing to consider any alternative.  “If it means I can get the full value of my money, maybe it is good,” Izzat the distressed mother says. “Then she hesitates before adding ruefully, “but we need to know it will work. We are tired of being part of experiments.”

This article is reproduced in its entirety