Summary of this article
Netanyahu proposed using crypto and blockchain to counter potential international economic sanctions.
The Bank of Israel rejected crypto solutions, urging focus on main partners.
Economists warned sanctions could severely damage investment, employment, and living standards.
Israeli Prime Minister Benjamin Netanyahu has raised the possibility of using cryptocurrency and blockchain technology as part of Israel’s response to potential international economic sanctions. The proposal has drawn criticism from the country’s central bank and economists, who have warned that economic isolation could affect investment, employment and living standards.
According to Reuters, Netanyahu said in an interview with Israel’s Channel 10 on Friday that Israel needed to prepare for a scenario in which sanctions could extend to its banking system. He agreed that cryptocurrency could be part of an alternative economic system and also referred to blockchain technology.
The comments come amid international criticism of Israel’s policies, including its settlement activity in the occupied West Bank. Britain, France and Canada have announced measures targeting imports from Israeli settlements.
Economists Warn Of Costs Of Economic Isolation
More than 100 economists, including former Bank of Israel officials, former central bank governor Jacob Frenkel and several Nobel laureates, signed a letter warning about the potential economic consequences of sanctions.
They warned that such measures could increase unemployment, reduce foreign investment and severely damage Israel’s standing in the international economy. The letter also cautioned that living standards could fall sharply and the government’s ability to finance security and defence could be weakened. The economists cited the experiences of South Africa, Iran and Russia as examples of the possible consequences of economic isolation.
Bank Of Israel Questions Cryptocurrency Approach
The Bank of Israel has rejected the idea that cryptocurrency can be used to bypass sanctions. It said Israel should focus on maintaining economic ties with its major trading partners and preventing sanctions from being imposed.
“The right course for Israel's economy is to preserve our economic relations with our main trading partners, and to focus on preventing sanctions and their negative impact on the economy,” the central bank said.
The bank’s position contrasts with Netanyahu’s proposal to explore cryptocurrency and blockchain as potential ways to prepare for wider restrictions. The economists’ letter also warned that sanctions could have consequences extending beyond the financial system, affecting jobs, investment and the country’s ability to fund security.
