It says it expects to be able to begin printing its own currency between 2010 and 2012, which will replace the current system of accepting a range of currencies including the Israeli shekel, Jordanian dinar and Egyptian pound.

However, the authority is still at least two years away from being able to set independent monetary policy. It has struggled to hire the required number of researchers and monetary policy professionals to allow it to begin setting its own interest rates and managing the economy with monetary policy tools.

Other aspects of the transition are on schedule, including the implementation of an electronic payments system to enable Palestinian banks to process transactions in real time and trade bonds.

The PMA has also appointed accountants Pricewaterhouse-Coopers to lead the implementation of a new internal audit system.

At present, the PMA’s primary role is as banking regulator for the Palestinian territories. The transition to a central bank is being done under the guidance of the IMF.

A PMA spokesperson says the Palestinian Authority’s political situation could further delay the implementation of the reforms, and without becoming a sovereign state the bank will find it difficult to take full control of monetary policy.

George Abed resigned as governor in early November and is expected to be replaced.