The Bank of Israel has publicly rebuked Prime Minister Benjamin Netanyahu over his suggestion that Israel prepare a cryptocurrency "bypass economy" to evade possible banking sanctions, in a rare open clash between the government and the central bank days before Tuesday's Knesset election.
Netanyahu raised the idea in a television interview on Friday, saying Israel should prepare a crypto and blockchain-based "bypass economy" so the country could get around possible banking sanctions if they were ever imposed.
The central bank answered on Saturday. Cryptocurrencies "cannot serve as a means of circumventing sanctions," the Bank of Israel said, adding that the country's leaders should focus on preventing sanctions rather than planning ways around them.
On Sunday the rebuke widened beyond the bank. More than 100 economists and business leaders, including former Bank of Israel governor Jacob Frenkel and Nobel laureates, signed an open letter expressing "deep alarm" at the proposal, calling it "a puzzling solution, one accepted in criminal organisations."
Netanyahu's election rival Gadi Eisenkot mocked the idea as a "BibiCoin policy," and opposition leader Yair Lapid also dismissed it.
The sanctions any such bypass would have to defeat run through the American-led banking system — the dollar network through which international payments move — which is why a plan to route around that system, floated by the prime minister of America's closest ally in the region, drew so sharp a public answer from his own central bank and from the country's economic establishment.
Netanyahu also repeated on Sunday that Iran or its proxies could attack in an attempt to disrupt Tuesday's vote.
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