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A group of 109 Israeli economists, including former Bank of Israel officials and senior public figures, published a joint letter opposing Prime Minister Benjamin Netanyahu's suggestion that cryptocurrency be used to get around Western sanctions on the country's banking system.

The signatories warned that sanctions on Israeli banks would paralyse companies, exporters, investors and the technology sector, and argued that Netanyahu was deliberately pushing the country toward an international boycott that would cause "irreparable damage."

Economists outline economic damage

The letter, reported by Israel's Channel 12, called Netanyahu's reference to cryptocurrency as a way around banking sanctions "surprising" and said his proposal to circumvent the measures had caused "deep concern and anxiety." It warned that the isolation Israel would face could inflict "irreparable damage."

The economists said unemployment would rise rapidly, foreign investment would stop entirely and the country's standing in the global economy would suffer a heavy blow. They also predicted direct effects on daily life: credit card use would halt, access to international e-commerce platforms would be blocked, and foreign workers would be forced to leave because they could no longer send money home. The health system, they wrote, would face serious difficulties obtaining medical equipment and medicines.

Sanctioned states cited as examples

The statement pointed to South Africa, Iran and Russia as countries that have faced sanctions, arguing that such restrictions lowered living standards for the population and weakened the state's ability to finance defence spending.

Netanyahu's proposal and the central bank's response

In an interview with Channel 10, Netanyahu commented on a decision by 12 Western countries to ban trade with Israeli settlements in the occupied Palestinian territories. He argued that Israel needed to switch to an alternative economic model to get around the sanctions and claimed blockchain technology could be used for that purpose.

The Bank of Israel rejected the idea yesterday, responding to Netanyahu's proposal to use blockchain technology and cryptocurrencies to circumvent Western sanctions with the words "prevent sanctions from being imposed."

Key takeaways

• 109 economists, including former Bank of Israel officials, signed a joint letter against Netanyahu's crypto proposal.
• The letter warned of surging unemployment, halted foreign investment and blocked access to international payment and e-commerce systems.
• The Bank of Israel rejected the proposal yesterday, urging that sanctions be prevented instead.
• Netanyahu made the comments after 12 Western countries banned trade with Israeli settlements in the occupied Palestinian territories.