Bank of Israel rejects Netanyahu's crypto sanctions workaround

Key points

• Netanyahu said in a Friday interview that Israel should prepare an alternative economic system that can bypass possible banking sanctions
• The Bank of Israel said the right course is preserving trade ties with principal partners and preventing sanctions
• Challenger Gadi Eisenkot called the proposal a national security threat and questioned how tech firms would be paid

The Bank of Israel has rejected Prime Minister Benjamin Netanyahu's proposal to use cryptocurrency to bypass possible international sanctions, Bitcoin.com News reports. In a statement, the central bank said the right course for the economy is to keep economic relationships with Israel's principal trade partners and concentrate on preventing sanctions and their negative effects. It added that the matter sits with the political leadership, which should act to advance it.

Netanyahu raised the idea in a Friday interview, saying Israel should prepare an alternative economic system in case military deployments bring banking sanctions. He pointed to crypto and blockchain as tools that could bypass such measures, and said he was working on that as well. He has followed Bitcoin for years, having said in 2017 that banks were destined to disappear.

Election rival weighs in

Gadi Eisenkot, Netanyahu's main challenger in the upcoming elections, criticised the plan as a threat to national security. He asked how an Israeli high-tech company with overseas clients could take payments or attract foreign investment, and how Google could buy an Israeli firm if the deal had to avoid international banking systems and be paid in cryptocurrency.

Netanyahu accepted the central bank's criticism, saying other tools besides crypto could achieve the same goal and keep Israel connected to the global financial system. He thanked the Bank of Israel for its advice but said he does what he thinks is right, citing his economic record.

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