Cryptoupdated 1h ago2 min read
Archive photo · 2 April 2023Bank of Israel Rejects Netanyahu’s Crypto Plan To Bypass Sanctions
“blockchain-based cryptocurrency is the solution to bypass the mounting economic sanctions”
“crypto is one of the means, it is not the only one and I am not sure we will use it.”
Photo: אורי פרקש, CC BY-SA 4.0 · Cropped for layout
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Bank of Israel rejects Netanyahu's crypto workaround, saying cryptocurrencies cannot evade sanctions. Netanyahu ordered a blockchain-based plan to counter potential international banking sanctions.
Netanyahu’s crypto pitch
Prime Minister Benjamin Netanyahu said Israel should prepare to use cryptocurrency to circumvent potential sanctions, telling Israel’s Channel 10, “We need to prepare ways to evade banking sanctions through an alternative economic system.” Netanyahu added that “You know what that means – the currencies that can bypass them,” and he said he was referring to blockchain-based crypto.
The Bank of Israel rejected the plan, saying digital currencies are not a viable tool for sidestepping financial restrictions and urging the government to protect commercial ties with Israel’s leading trading partners. Reuters reported that Netanyahu said he was preparing for a scenario in which broader sanctions were imposed on Israel, and Netanyahu told Channel 10, “There could be sanctions, and sanctions on banks so you need to set up a bypass economy.”
Central bank rebuke
The Bank of Israel said cryptocurrencies “cannot be used as a route to circumvent sanctions,” and it urged political leaders to preserve economic relations with Israel’s main trading partners. Reuters described the rebuke as rare, and the central bank said, “The right course for Israel's economy is to preserve our economic relations with our main trading partners.”
Opposition leaders and rivals seized on the proposal, with Gadi Eisenkot calling the crypto plan “madness” and fearing that the “BibiCoin policy” would drive companies abroad and undermine national security. Reuters also reported that more than 100 economists, including former Bank of Israel officials and Nobel laureates, signed a letter warning that the proposal would lead to higher unemployment, a fall in foreign investment, and the collapse of Israel’s economic standing.
What’s at stake
The letter signed by more than 100 senior Israeli economic figures warned that sanctions would “utterly destroy” Israel’s economic model, and it said economic sanctions would “utterly destroy the model that allows Israel to exist as a modern and advanced market.” The same letter warned that the living standards of Israeli citizens would plummet dramatically and that the state’s ability to finance its security and defend itself against its enemies would be severely damaged, as Reuters quoted from the letter.
Al Jazeera said Netanyahu’s crypto pitch came as Israel faced growing global isolation over its war on Gaza and settlement expansions in the occupied West Bank, and it framed the proposal as a way to bypass sanctions that would keep Israel out of the international financial system. The Hebrew Walla report, prepared by Yitzhar Ron, said signatories warned that “the unemployment rate will rise, and our ability to defend ourselves against enemies will be greatly affected,” while criticizing Netanyahu’s reliance on digital currencies and blockchain technology.