Israel's Central Bank and over 100 economists oppose a government plan to use cryptocurrency to circumvent international sanctions.
Regulation & Gov ·
Israel's central bank rejected Prime Minister Benjamin Netanyahu's proposal to deploy cryptocurrency and blockchain infrastructure as a workaround against international sanctions, stating that digital assets cannot circumvent such measures. The Bank of Israel emphasized that preserving economic ties with major trading partners and preventing sanctions altogether represent the appropriate strategy. Netanyahu had told media on Friday that he instructed officials to develop a blockchain-based framework to manage potential banking restrictions, though he did not identify the specific currency, network, or team responsible for the proposal.
On Sunday, more than 100 economists—among them former Bank of Israel governor Jacob Frenkel and multiple Nobel Prize recipients—issued a joint statement warning the plan would trigger joblessness and capital flight. They rejected the proposal as ineffective and compared it to methods used by criminal networks. Economists also argued the plan lacks practical viability, noting that blockchain transactions remain traceable despite their transparent architecture, making sanctions evasion unfeasible through this mechanism. Israel has previously used blockchain analysis to freeze 37 cryptocurrency wallets it attributed to Iran's Revolutionary Guards, holding over 24 million shekels.
Netanyahu's political opponents seized on the announcement ahead of Tuesday's election, with challenger Gadi Eisenkot calling the initiative counterproductive and opposition leader Yair Lapid drawing parallels to the economies of Iran, Russia, and Venezuela. Netanyahu responded that he would weigh the central bank's position while pursuing what he deemed necessary for the country. Current polling suggests neither his coalition nor the opposition is positioned for a clear electoral majority.