Israel's Central Bank Tells Netanyahu His Crypto Sanctions Workaround Won't Work

Prime Minister Benjamin Netanyahu wants Israel to build a cryptocurrency system to survive future banking sanctions. On Saturday, the Bank of Israel told him publicly that the idea will not work.

The central bank's rejection was unusually direct. "Cryptocurrencies cannot serve as a means of circumventing sanctions," it said, urging political leaders to focus on preventing sanctions and preserving Israel's economic ties with trading partners rather than seeking workarounds.

Netanyahu had ordered officials to develop a blockchain-based plan to bypass potential banking sanctions. He told Channel 10 that Israel needs to "organize in a bypass economy," adding, "And you know what digital currencies are, and I'm working on that too." He also said American military aid is "only a matter of time" to end.

The proposal drew sharp criticism from senior economists, former government officials and financial experts. Yashar party chairman Gadi Eisenkot released a campaign video on Saturday calling the plan an admission that Netanyahu had economically "destroyed the country." Eisenkot said the alternative system would produce "an economy like North Korea and Iran" and result in "the end of high-tech, the end of healthcare, the end of security."

The dispute is not about crypto mechanics. It exposes a split over whether Israel should double down on its existing trade and financial relationships or prepare an isolationist fallback. The central bank's public pushback signals that institutions see sanctions-prevention diplomacy, not digital-asset workarounds, as the safer path. Opposition figures are already using the idea to argue the government is risking the high-tech, healthcare and security sectors that depend on international integration.

What is clear is the institutional position. When a central bank publicly tells a sitting prime minister that his sanctions workaround cannot function, it is drawing a line between defending trade ties and building an autarkic alternative. The Bank of Israel has chosen the former.