Palestine was part of the Ottoman Empire from 1516 until the British occupied it on September 26, 1918. When Palestine was divided in 1948, the West Bank became part of Jordan, and the Gaza Strip became part of Egypt. The West Bank and Gaza Strip were seized by Israel in June 1967 during the Six-Day War. Jordan renounced its claim to the West Bank on July 31, 1988, and the Palestinian Authority was set up on February 12, 1996 to govern parts of the West Bank and Gaza Strip.
Ottoman Empire Piastres (XOTP) circulated in Palestine while it was part of the Ottoman Empire. Egyptian Pounds (EGP) circulated in Palesine from 1918 until November 1, 1927 when the Palestine Pound (PSP) was created. The Jordanian Dinar (JOD) replaced the Palestinian Pound on July 1, 1950 at par with the Palestine Pound on the West Bank. In 1951, Egyptian Pounds replaced Palestinian Pounds in the Gaza Strip.
After Israel seized the West Bank and Gaza Strip, the Israeli monetary system was introduced. The Israeli Pound (ILP) became the medium of exchange in the occupied territories. The Israeli Pound was replaced by the Sheqel (ILL) on February 22, 1980 with 1 Pound equal to 10 Sheqels. Inflation during the 1980s led to the introduction of a New Sheqel (ILS) at the rate of 1 New Sheqel equal to 1000 Old Sheqels. The Sheqel is divided into 100 Agorot and 1000 Prutot. Banknotes are issued by the Bank of Israel.
Transactions in the West Bank are carried out in both Israeli Sheqels and in Jordanian Dinar, though Israeli Sheqels predominate. Transactions in the Gaza Strip are in Israeli Sheqels since transactions in Egyptian Pounds are not legal. The Palestine Authority has established a Palestine Monetary Authority, but it does not issue any currency.
