Israel's central bank has publicly rejected Prime Minister Benjamin Netanyahu's suggestion that cryptocurrency could help the country evade potential international sanctions, marking a rare official rebuke days before the nation's election.
The Bank of Israel stated in a Saturday statement that cryptocurrencies "cannot serve as a means to circumvent sanctions imposed on Israel." The central bank added that "the right course of action for the Israeli economy is to preserve economic relations with our primary trading partners and to focus on preventing sanctions and their negative impact on the economy."
Netanyahu said in a Friday television interview that Israel should prepare for possible banking sanctions and that he had requested a plan using crypto and blockchain networks to address them. "Blockchain is one of the alternatives, certainly," he said, without specifying who would draft the plan or which currency or network would be involved.
The proposal drew swift criticism from the economic community. More than 100 economists, including former Bank of Israel governor Jacob Frenkel and several Nobel laureates, signed a letter warning that the plan would cause higher unemployment and collapse foreign investment. They characterized it as "a puzzling solution, one accepted in criminal organizations, that will not help in the slightest."
Gadi Eisenkot, Netanyahu's main challenger in Tuesday's election, called the idea "madness" and dismissed the "BibiCoin policy" as a plan that would drive companies abroad. Opposition leader Yair Lapid compared Netanyahu's proposed "bypass economy" to those of Iran, Russia, and Venezuela.
Economists also questioned the feasibility of the plan. Gali Ingber, head of finance studies at the College of Management Academic Studies, noted that "it's not possible to circumvent sanctions with digital currencies as the blockchain system is publicly open and transparent, which means that every transfer is registered and can be traced to its origin."
The debate occurs as some countries, including the UK, France, and Canada, have announced or pledged restrictions on trade with Israeli settlements in the West Bank. Israel itself has used blockchain tracing technology to target sanctioned groups, including signing sanctions orders on 37 crypto wallets in July that it said belonged to Iran's Revolutionary Guards.
