Gaza faces liquidity crisis as banking system collapses

Israeli restrictions and extensive war damage have plunged Gaza’s banking sector into a severe liquidity crisis, according to local officials and financial analysts. The closure of border crossings, the suspension of cash inflows, and the destruction of key infrastructure have left banks unable to meet routine withdrawal requests, forcing many to limit or halt services altogether. Merchants and households report that the scarcity of cash is disrupting daily commerce, with vendors unable to pay suppliers and consumers struggling to purchase basic goods.

The crisis has broader economic implications for the enclave, where the formal financial system already operated under tight constraints before the conflict. International aid agencies have warned that the lack of liquidity could exacerbate humanitarian needs, prompting calls for the rapid reopening of humanitarian corridors and the establishment of alternative cash distribution mechanisms. Until such measures are implemented, Gaza’s economy is expected to remain crippled, with limited access to banking services further hampering recovery efforts.