MORGANABLE BUSINESS / MARKETS & MONEY
Economists, business leaders and former public officials have warned that an Israeli proposal to use cryptocurrency to avoid possible international sanctions could damage the country’s economy and discourage foreign investment.
Akure —
Economists, business leaders and former public officials have warned that an Israeli proposal to use cryptocurrency to avoid possible international sanctions could damage the country’s economy and discourage foreign investment. Their warning followed Netanyahu’s remarks.
NETANYAHU’S PROPOSAL
In an interview with Israel’s Channel 10 economic television network, Netanyahu said the country needed to prepare for possible broader sanctions, including restrictions on Israeli banks.
He suggested that alternative currencies could help the economy operate if conventional financial channels came under pressure. When asked whether he meant cryptocurrency, he agreed and also mentioned blockchain technology.
Netanyahu’s remarks came after Britain, France and Canada announced measures targeting imports from Israeli settlements in the occupied West Bank.
However, the announcements do not mean that Israel’s banking system is already under international sanctions.
ECONOMISTS SOUND THE ALARM
On October 25, 109 economists, business leaders and former public officials issued a statement expressing serious concern about the proposal.
The signatories included Jacob Frenkel, a former governor of the Bank of Israel, as well as former senior officials and prominent academics.
They argued that sanctions on Israeli banks could cause severe damage across the economy.
The group warned that companies, exporters, investors and technology businesses could struggle to operate if they lost access to international banking services.
Businesses depend on cross-border payments to receive revenue, pay suppliers and fund projects.
If banks abroad stopped serving Israeli clients, those activities could become slower, more expensive or impossible.
The signatories warned that the impact could reach ordinary households. Restrictions on banking could affect credit-card payments, online purchases and money transfers by foreign workers to relatives abroad.
They further cautioned that healthcare providers might find it harder to buy medical equipment and medicines if payment channels were disrupted.
These outcomes are warnings about what could happen if broad sanctions were imposed, not evidence that they have already occurred. Nevertheless, the economists argue that leaders should treat the possibility seriously.
They say a plan built around avoiding restrictions could increase concern about Israel’s economic direction instead of restoring confidence.
CENTRAL BANK REJECTS CRYPTO AS A FIX
The Bank of Israel publicly rejected Netanyahu’s suggestion. It said cryptocurrencies cannot serve as a route for bypassing sanctions and urged political leaders to focus on preventing restrictions from being imposed.
The central bank also stressed the importance of preserving economic relations with Israel’s main trading partners.
Cryptocurrency can allow users to transfer value between digital wallets, sometimes without a bank processing each step.
However, businesses still need customers, suppliers, exchanges and service providers willing and legally able to deal with them.
Digital transactions also do not automatically remove legal risks. Cryptocurrency exchanges and other financial companies may have to comply with sanctions rules.
Public blockchain transactions can often be traced, while businesses may still need conventional currencies to pay wages, taxes and suppliers.
As a result, digital assets cannot guarantee that companies will avoid the wider effects of financial restrictions.
WHY FOREIGN INVESTORS MAY WORRY
Foreign investors consider political stability, reliable regulations and access to international markets before committing money to a country.
They also assess whether they can move funds, pay partners and sell products without unexpected barriers.
A public debate about bypassing possible sanctions may therefore create uncertainty even before any new restrictions take effect.
If investors believe that banking access could be disrupted, they may delay projects, reduce their exposure or choose another market.
Technology companies could face particular pressure because many rely on overseas clients, international funding and global supply chains.
A loss of confidence could affect hiring, expansion plans and the flow of capital into new businesses.
Lenders and insurers may also become more cautious when the legal status of future transactions is unclear.
Even firms that want to continue operating may face additional checks, higher costs or delays. These risks do not mean that foreign investment will disappear, but they show why clear policies and trusted financial relationships matter.
DIPLOMATIC PRESSURE AND ECONOMIC RISK
Netanyahu has presented the proposal as preparation for a possible future challenge. However, critics argue that the priority should be preventing sanctions and maintaining international ties.
The Bank of Israel’s response reflects that position: it says Israel should preserve relationships with its main trading partners rather than rely on a workaround.
WHAT HAPPENS NEXT
The next important question is whether the government will develop a concrete proposal and, if so, how it would work in practice.
Public reports have not shown that Israel has implemented a cryptocurrency system to replace international banking.
The central bank’s objection also signals that key economic institutions do not support treating crypto as a dependable answer to sanctions.
For now, the potential effects on investment remain uncertain because broader sanctions on Israeli banks have not been established in the reports.
Still, economists say the discussion itself carries risks if it signals that the country may become less connected to global finance. Investors often respond not only to rules already in place but also to the possibility of sudden changes.
Cryptocurrency may provide useful payment options in some circumstances, but it cannot replace the full range of services offered by banks and international financial networks.
It does not guarantee access to overseas customers, legal protection or stable commercial relationships. The economists’ warning is therefore about more than the technology: they believe Israel’s economic strength depends on keeping international partners confident.
The debate now centres on whether Israel can reduce diplomatic tensions and protect its economic links while preparing for possible future restrictions.
Economists argue that prevention offers a safer path than trying to work around sanctions after they arrive.
For no foreign investors, the outcome may influence how they assess Israel’s stability, business climate and long-term prospects.
