The Bank of Israel has pushed back on a public proposal from Prime Minister Benjamin Netanyahu to use cryptocurrency as a way to circumvent potential international sanctions on the Israeli economy, arguing that the country's efforts are better spent keeping sanctions from being imposed at all.
In a statement, the central bank said the right course 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." The institution also assessed that the matter fell "within the responsibilities of the political echelon, and it should act to advance it."
Central bank urges focus on prevention
The Bank of Israel's response followed comments Netanyahu made in an interview on Friday, in which he said cryptocurrency might offer an alternative economic path should Israel face international economic and banking sanctions tied to the country's military deployments.
"We need to understand that there could be banking sanctions. You need to prepare an alternative economic system, and you know what that is, and you know which currencies can bypass this, and I'm working on that as well," Netanyahu said, pointing to crypto and blockchain technology as tools that could be used to work around such restrictions.
The prime minister is not a newcomer to the subject. In 2017, asked whether individuals should invest in bitcoin, Netanyahu said banks were destined to disappear.
Political rival warns of security and tech risks
Gadi Eisenkot, Netanyahu's main challenger in the upcoming elections, criticized the proposal and described it as a threat to national security.
"After dismantling Israeli society and weakening the IDF, Netanyahu has set his sights on his next target: the long-term destruction of the Israeli economy for generations to come," Eisenkot said.
He also raised questions about how the country's technology sector would function under such an arrangement. "How could an Israeli high-tech company with overseas clients receive payments or secure foreign investment? How could Google acquire an Israeli firm if the condition were to bypass international banking systems and pay in cryptocurrency?" Eisenkot asked.
Netanyahu acknowledges criticism
Netanyahu acknowledged the Bank of Israel's criticism and conceded that, beyond cryptocurrency, other tools were available to achieve the same objective and to maintain a connection to the global financial system if Israel were targeted by international sanctions.
"I thank the Bank of Israel for their advice, but I do what I think is right—and my long-term track record shows that I have led the State of Israel to unprecedented economic prosperity," Netanyahu said in a recent interview.
