‘Irreversible damage’: Top economists ‘gravely concerned’ at Netanyahu touting crypto to beat sanctions

Prime Minister Benjamin Netanyahu faces sharp criticism from Israel’s central bank and a coalition of over 100 senior economists and former officials who warn that his proposal to use cryptocurrency to circumvent potential international banking sanctions would inflict irreversible damage on the national economy. The controversy erupted this week, just two days ahead of Tuesday’s Knesset elections, following remarks made by the Prime Minister in a Friday interview with the Channel 10 economic network. In the broadcast, Netanyahu stated that Israel must prepare for the possibility of banking sanctions imposed by the international community. He suggested that cryptocurrencies and blockchain technology could serve as an alternative economic system to bypass such restrictions. When asked directly if he referred to cryptocurrency, he confirmed, “Very correct,” adding that he had instructed his advisors to draft a plan for their utilization. The Bank of Israel issued a formal rebuttal on Saturday, rejecting the Prime Minister’s strategy. The central bank stated that cryptocurrencies cannot be used as a route for bypassing sanctions. Instead, the institution argued that the appropriate course for the Israeli economy is to preserve existing economic relations with major trading partners and to focus on preventing sanctions and mitigating their negative impacts. The Bank emphasized that preventing sanctions falls under the responsibility of the political leadership and urged the government to take steps to protect the country’s economic ties. In a subsequent interview on Saturday, Netanyahu acknowledged the central bank’s objections. He stated that he heard the concerns and took them into account, thanking the Bank of Israel for its advice. However, he maintained his position, saying, “I listen, but I do what I think is right.” He clarified that cryptocurrency was merely one of several possible options being considered. A group of 109 senior economists, business executives, and former public service officials released a statement expressing grave concern and anxiety over the Prime Minister’s comments. The Economists’ Forum for Democracy described the proposal as puzzling and warned that Netanyahu is knowingly leading Israel toward international economic boycott and isolation. They asserted that such actions would result in tremendous and irreversible damage to the economy. The signatories included prominent figures such as Professor Jacob Frenkel, former governor of the Bank of Israel; Professors Zvika Eckstein and Avia Spivak, former deputy governors; and Yair Avidan, former supervisor of banks. Other notable signatories included former Finance Ministry director generals Avraham Ben-Bassat, David Brodet, and Yarom Ariav, as well as Professor Manuel Trajtenberg, former head of the National Economic Council. Academic experts from the Hebrew University, including Professors Eytan Sheshinski and Reuben Gronau, and Professor Itai Ater of Tel Aviv University, also signed the letter. Additionally, the list of signatories featured Nobel laureates Joel Mokyr, awarded the Nobel Prize in Economics in 2025, and Aaron Ciechanover, a Nobel Prize winner in Chemistry. The economists detailed the specific consequences they believe would follow if comprehensive sanctions were implemented. They warned that sanctions on the Israeli banking system would render corporations, exporters, investors, and the technology sector unable to operate. According to the forum, unemployment would surge, foreign investment would vanish entirely, and Israel’s global economic standing would collapse. Beyond macroeconomic effects, the group stated that ordinary citizens would face severe hardships. Israelis would lose access to credit cards, and international e-commerce platforms such as Amazon and AliExpress would be blocked. Foreign workers, unable to remit funds to their families abroad, would abandon the country in large numbers. The healthcare system would also be crippled, as it would become impossible to procure necessary medical equipment and medications. Drawing parallels to other nations subjected to economic sanctions, such as South Africa, Iran, and Russia, the forum noted that these measures historically lead to a decline in the standard of living for citizens. Furthermore, they observed that such sanctions reduce the state’s capacity to finance defense and protect itself against adversaries. The signatories criticized Netanyahu for failing to grasp the seriousness of the threat. They characterized his proposed solution as one typically associated with criminal organizations rather than legitimate state policy. Opposition politicians have also joined the critique, arguing that attempts to avoid international financial sanctions could further undermine investor confidence. Netanyahu’s remarks followed recent diplomatic developments involving Western allies. Britain and eleven other Western countries recently announced sanctions targeting goods from Israeli settlements in the West Bank. These measures were introduced in response to a wave of settler attacks on Palestinians and the approval of massive settlement construction by Netanyahu’s hard-right government. While the UK-led sanctions are designed to specifically target the settlements, economists and industry figures have warned that the economic repercussions could spill over into Israel proper. Currently, there are no comprehensive restrictions against the Israeli banking system, though several states have already imposed sanctions on individual settlers, organizations, and government members. Israel continues to face international pressure regarding its policies in the occupied West Bank and its operations in the Gaza Strip. The debate highlights a significant divide within Israel’s economic establishment regarding how to handle potential external financial pressures. While the Prime Minister advocates for technological alternatives to maintain economic autonomy, institutional bodies and expert consensus favor maintaining traditional trade relationships and diplomatic engagement to prevent escalation. The upcoming parliamentary election provides immediate political context for these disputes, with critics accusing the Prime Minister of using the issue for electoral advantage. The central bank’s rare direct criticism of the Prime Minister underscores the severity with which financial institutions view the proposed shift away from conventional banking norms. As the election approaches, the tension between executive intent and institutional expertise remains a focal point of domestic discourse.