The report released Tuesday credited reforms and a "prudent fiscal policy" with enabling the Palestine Monetary Authority to "fulfill core functions of a central bank."
A strong banking system is vital for a future Palestinian state to sustain itself, it said.
The report said the reforms allowed the Palestinian Authority to reduce its dependence on foreign aid for its regular budget, from $1.8 billion in 2008 to $1.2 billion in 2010, and less than $1b projected for 2011.
It found that Palestinians are now "able to conduct the sound economic policies expected of a future well-functioning Palestinian state."
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