supervision responsibilities of the home authority concerning subsidiaries will be according to the " Basle Concordat ".

Accordingly, each authority will transfer to the other authority copies of its examination reports and any information relevant to the solvency, stability and soundness of the banks, their branches and subsidiaries.

6. The BOI and the PMA will establish a mechanism for cooperation and for the exchange of information on issues of mutual interest.
   
   

1. The New Israeli Sheqel ( NIS ) will be one of the circulating currencies in the Areas and will legally serve there as means of payment for all purposes including official transactions. Any circulating currency, including the NIS, will be accepted by the Palestinian Authority and by all its institutions, local authorities and banks, when offered as a means of payment for any transaction.
   
   
2. Both sides will continue to discuss, through the JEC, the possibility of introducing mutually agreed Palestinian currency or temporary alternative currency arrangements for the Palestinian Authority.

1. The liquidity requirements on all deposits in banks operating in the Areas will be determined and announced by the PMA.
   
   
2. Banks in the Areas will accept NIS deposits. The liquidity requirements on the various kinds of NIS deposits ( or deposit linked to the NIS ) in banks operating in the Areas will not be less than 4% to 8%, according to the type of deposits. Changes of over 1% in the liquidity requirements on NIS deposits ( or deposits linked to the NIS ) in Israel will call for corresponding changes in the above mentioned rates.
   
   
3. The supervision and inspection of the implementation of all liquidity requirements will be carried out by the PMA.
   
   
4. The reserves and the liquid assets required according to this paragraph will be deposited at the PMA according to rules and regulations determined by it. Penalties for non compliance with the liquidity requirements will be determined by the PMA.
   
   

The PMA will regulate and administer a discount window system and the supply of temporary finance for banks operating in the Areas.

1. The PMA will establish or license a clearing house in order to clear money orders between the banks operating in the Areas, and with other clearing houses.
   
   
2. The clearing of money orders and transactions between banks operating in the Areas and banks operating in Israel will be done between the Israeli and the Palestinian clearing houses on same working day basis, according to agreed arrangements.
   
   

Both sides will allow correspondential relations between each others' banks.

The PMA will have the right to convert at the BOI excess NIS received from banks operating in the Areas into foreign currency, in which the BOI trades in the domestic inter - bank market, up to the amounts determined per period, according to the  arrangements detailed in para 16 below.

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