Bank of Israel rejects Netanyahu cryptocurrency plan to bypass future sanctions

Netanyahu warned that Israel should prepare for restrictions affecting its banking system.

By Vered Weiss, World Israel News

Israel’s central bank said cryptocurrency would not provide a viable way around potential banking sanctions after Prime Minister Benjamin Netanyahu said he had asked advisers to develop plans involving blockchain technology.

Netanyahu discussed the possibility during an interview with the Channel 10 economic network, warning that Israel should prepare for restrictions affecting its banking system.

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

The interviewer raised cryptocurrency as one possible means of doing so, and Netanyahu agreed.

When asked separately about blockchain, Netanyahu said that was also an option and that he had instructed his advisers to draw up a plan for its utilization.

Blockchain operates as a decentralized digital system without dependence on central government authorities.

While it has been viewed as an alternative to traditional banking, transactions conducted through the technology remain traceable.

The Bank of Israel disputed the feasibility of circumventing sanctions through cryptocurrency, arguing that Israel should concentrate instead on maintaining its international economic relationships and preventing restrictions from being imposed.

“Cryptocurrencies cannot serve as a route to bypass sanctions,” the bank said. “The right thing for Israel’s economy is to preserve economic relations with our main trading partners and to focus on preventing sanctions and their negative impact on the economy. This issue falls within the purview of the political echelon, and it is appropriate to take action to advance it.”

The bank separately said it is “better to focus on preventing sanctions,” because participation in the global economy cannot be conducted exclusively through cryptocurrencies.

Channel 12 also quoted a senior Israeli economic official warning against the proposal.

“The idea will certainly not achieve its goal. Even talking about it could harm the economy,” the official said.