Prime Minister Benjamin Netanyahu will hold a security-political meeting on Monday evening regarding Israel's response to the intentions of European countries to recognize a Palestinian state in September.
Smotrich is expected to demand the application of sovereignty over the West Bank and the immediate dismantling of the Palestinian Authority (PA).
About three months ago, Smotrich announced the suspension of fund transfers to the PA and his intention not to extend the indemnification for Israeli banks transferring funds to the PA.
This was done by canceling the indemnity provided to correspondent banks in relation to banks operating in the Palestinian Authority, his office confirmed on Tuesday.
Until that moment, Smotrich had only occasionally delayed the transfer of funds from time to time, but had not ordered a complete halt.
European countries to recognize a Palestinian State
France and the UK are the two main European countries that plan to recognize a Palestinian State in the UN General Assembly in New York in September, alongside other European and non-European nations.
Australia was the last to announce that it would recognize a Palestinian state, while Canada, another important Western ally, will also follow this route.
Countries that still have not taken a position in this situation are New Zealand, whose Foreign Minister Winston Peters said he was carefully considering recognition of a Palestinian state, and Denmark, whose Prime Minister Mette Frederiksen said that while her country condemned Prime Minister Benjamin Netanyahu, she did not support recognizing a Palestinian state at this time.
Palestinian Authority President Mahmoud Abbas is considering unilaterally announcing the transformation of the PA into a state during the upcoming General Assembly, London-based outlet al-Araby al-Jadeed reported.
Avraham Bloch, Reuters, and Mathilda Heller contributed to this report.