Israeli Prime Minister Benjamin Netanyahu has drawn strong criticism from the Bank of Israel and major opposition figures after stating that the country should prepare an alternative economic system, including cryptocurrencies, to deal with potential international banking sanctions. The central bank issued a clear rejection, stating that digital assets cannot serve as a viable way to circumvent such measures.

Netanyahu’s Comments on Alternative Systems

In an interview with Channel 10, Netanyahu expressed concern about the possibility of banking sanctions being imposed on Israel. He said the country needs to prepare an alternative economic framework capable of bypassing them. When asked whether he meant cryptocurrencies and blockchain technology, he confirmed that this was one of the options under consideration and that he had already requested that a plan be prepared.

Netanyahu later clarified his position in a separate interview, noting that cryptocurrencies represent only one potential avenue among several. He said it is not certain the approach would actually be used. He acknowledged receiving cautionary advice from multiple sources, including the Bank of Israel, and stated that he takes those views into account while continuing to make decisions he believes are necessary to protect the country.

Central Bank’s Firm Rejection

The Bank of Israel responded with an unusually direct statement. It declared that cryptocurrencies cannot serve as a means to circumvent sanctions. The central bank stressed that the Israeli economy’s interests lie in maintaining stable economic and financial relations with its main trading partners. It urged a focus on preventing the imposition of sanctions and the serious negative consequences that would follow.

According to the Bank of Israel, responsibility for avoiding sanctions rests first and foremost with the political leadership. The institution called on the government to take all necessary steps to prevent economic isolation and to strengthen international economic ties rather than pursue marginal alternatives.

Opposition Leaders Condemn the Proposal

Opposition figures reacted strongly. Gadi Eisenkot, leader of the Yashar party, accused Netanyahu of targeting the Israeli economy for long-term damage. He described the idea as a threat to national security and questioned how Israeli technology companies would receive foreign payments or investment if they were expected to operate outside conventional banking channels.

Naftali Bennett, head of the B’Yachad party, said he was horrified by what he called a defeatist vision in which Israel becomes a withdrawn and outcast country forced to rely on a crypto-based and isolated economy. Avigdor Liberman, chairman of Yisrael Beytenu, argued that Netanyahu is disconnected from reality. He noted that blockchain transactions are often traceable and that authorities already know how to identify and restrict activity linked to sanctioned entities. Liberman also pointed out that Netanyahu had previously blocked efforts to regulate and promote the crypto industry in Israel.

Industry and Economic Concerns

Leaders in Israel’s high-tech sector voiced alarm. The Israeli High-Tech Headquarters, representing senior industry executives, described the proposal as highly dangerous. The group said preparing to operate outside the Western financial system would undermine the economic model Israel needs to protect. It compared the idea of an isolated crypto-based economy to the situations of countries such as Iran or North Korea.

Eyal Waldman, founder of Mellanox, now part of Nvidia, stated that Israel should continue trading with Asia, Europe and the United States rather than face economic boycotts. Professor Itai Ater of Tel Aviv University warned that sanctions would dismantle the economic model that sustains Israel as a modern economy, leading to sharp rises in unemployment, vanishing investment and a collapse in the country’s global standing.

Analysts noted that Israel’s defense industries, technology exporters and critical supply chains depend heavily on international banking relationships, foreign investment and access to advanced components. Cryptocurrency transactions would not replace the ability to purchase fighter jets, spare parts, or maintain complex global commercial ties.

Context of Growing International Pressure

The debate occurs against a backdrop of mounting external pressure. Last month, 12 major nations led by the United Kingdom announced coordinated measures targeting individuals and companies involved in financial or construction services linked to Israeli settlements in the West Bank. Economists have warned that even targeted settlement-related measures could have broader effects on the Israeli banking system and the wider economy, which relies heavily on technology exports and global financial transactions.

Some advisers close to Netanyahu have defended the need for contingency planning, arguing that political shifts in Europe and elsewhere make it prudent to consider various scenarios. Others maintain that the priority must remain preventing sanctions rather than preparing to operate under them.

Netanyahu’s remarks also echoed earlier comments in which he spoke of Israel needing to become more self-reliant in the face of growing isolation. Those earlier statements similarly triggered controversy before the prime minister sought to clarify them by pointing to continuing support from countries outside Europe.