Bank of Israel rejects Netanyahu’s claim crypto could help evade financial sanctions

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Key takeaways

The Bank of Israel stated that cryptocurrencies cannot bypass international sanctions.
Prime Minister Netanyahu had previously suggested crypto as a way to circumvent future banking measures.
The Economists' Forum criticized the proposal as a bizarre solution showing sheer ignorance.

Israel’s central bankers have rejected a suggestion from Prime Minister Netanyahu that cryptocurrency could be used to circumvent international sanctions on the country.

Speaking in an interview with Channel 10 on Friday, Netanyahu had told Israelis to prepare for a prospective tightening of measures against Jerusalem, as the UK and EU threaten retaliation to the prospective expansion of West Bank settlements.

“You have to understand that there could be banking sanctions,” he said. “You need to prepare an economy that can circumvent them… and I’m working on that as well.”

When the interviewer asked if cryptocurrencies were among the possible solutions, Netanyahu confirmed this was the case.

Central bank and economists push back

However, the Bank of Israel protested the idea in a statement, saying that the digital currencies “cannot be used as a route for bypassing sanctions”.

“The right thing for Israel’s economy is preserving the economic relationships with our principal trade partners and focusing on preventing sanctions and their negative influence on the economy,” it went on. “This issue is within the responsibilities of the political echelon, and it should act to advance it.”

The proposal was also criticised by the Economists’ Forum, a group of more than 100 economists, business executives and former government officials, including a former Bank of Israel governor, which labelled it “puzzling” and expressed “grave concern and anxiety”.

Warnings over economic isolation

The forum also expressed alarm at the prospect of banking sanctions, saying: “Unemployment will surge, foreign investments will vanish entirely, and Israel’s global economic standing will collapse.

“Beyond the catastrophic macroeconomic impact, Israeli citizens will be harmed: Israelis will not be able to use credit cards, international e-commerce platforms (such as Amazon and AliExpress) will be blocked to Israeli customers, and foreign workers will abandon the country en masse due to their inability to remit funds to their families.”

The statement accused Netanyahu of leading Israel “toward a boycott and international economic isolation,” which would cause “irreversible damage,” adding that he had offered only “a bizarre solution… which will be of no help whatsoever,” which it said revealed “a fundamental lack of understanding and sheer ignorance regarding the collapse of Israel’s standing in the international arena.”

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