Israel’s finance minister has extended a waiver that allows cooperation between its banking system and Palestinian banks in the occupied West Bank, Reuters quotes the minister’s spokesperson as saying.

The waiver, which was due to expire at the end of June, allows Israeli banks to process shekel payments for services and salaries tied to the Palestinian Authority. Without it, the Palestinian economy would have taken a hit.

Finance Minister Bezalel Smotrich extended the waiver during a recent cabinet meeting, his spokesperson said.

US Treasury Secretary Janet Yellen has said it was important to keep open the Israeli-Palestinian correspondent banking relationships to allow battered economies in the West Bank and the Gaza Strip to function and help ensure security.

The Palestinian economy relies heavily on this relationship to process transactions made in Israeli shekels. Some 53 billion shekels ($14bn) were exchanged at Palestinian banks in 2023, official data shows.