Netanyahu’s Sanctions Plan Sends Banks Into Market Watch

Prime Minister Benjamin Netanyahu said he’d ordered officials to prepare for possible banking sanctions, including through blockchain technology. Israel’s financial-sector figures warned that even partial restrictions could disrupt payments and rattle markets.

In an interview with Israel's Economy Channel on Friday, Netanyahu said: “You have to understand that there could be banking sanctions. You need to prepare an economy that can circumvent them.” Asked whether blockchain could provide an alternative, he replied: “One of them, certainly. And I've already asked for a plan to be prepared for that.” His comments came amid sanctions announced by several European countries and Canada.

Senior figures in Israel's capital markets and banking sector told Israel Hayom they feared the warning itself could affect investment decisions before any new restrictions arrived. They expected international money transfers to face disruption, bank stocks to come under pressure and investors to suffer possible losses when trading resumed Monday. The state’s financial contingency plan remained only a plan; the market was already pricing the words.

A warning with market consequences

A senior executive at one of Israel's largest banks said he knew of no threat like Netanyahu's scenario and hoped the remarks amounted to election rhetoric. “Obviously, sanctions of the kind Netanyahu is talking about would change the rules of the game, but we don't understand what he's talking about. We have no indication of anything like that,” he said.

Restrictions short of removing Israel from SWIFT, the international messaging network banks use to send payment instructions, could still slow economic activity, banking officials said. SWIFT exclusion would mark an extreme measure. Partial restrictions, officials said, could prompt requests for checks and documents in either the sending or receiving country, with requirements varying from one country to another. One authorization might not cover every transaction.

The potential fallout could reach businesses and international trade relationships, not just banks. Officials also expected pressure on bank shares and bonds, which institutional and foreign investors favor. Investment managers told Israel Hayom they were preparing for a possible sell-off when the Tel Aviv Stock Exchange reopened Monday, Oct. 26, 2026. Investors might delay purchases or sell Israeli stocks and bonds, including bank securities.

One senior capital-markets figure warned: “If Netanyahu doesn't find a way to calm things down, we're heading for a market with no bottom.” Asked what that meant, the source said: “A 20% drop in the stock market is entirely possible.” The report called that an extreme scenario, not a consensus forecast.

Acquisitions, exits and ownership abroad

The market anxiety comes as Israel's technology sector draws multibillion-dollar acquisition interest. Eliezer Avraham, writing in JNS, said the sector had changed substantially over the past five years. He cited Wiz, CyberArk, Armis, Next Insurance and Melio as businesses attracting global buyers. A decade ago, exits often measured in hundreds of millions of dollars; billion-dollar and tens-of-billions-of-dollars outcomes have since become increasingly common, he wrote.

Avraham credited the sector’s growth to engineering talent, military technology expertise, entrepreneurial culture and mature venture-capital networks. Google, Palo Alto Networks, Microsoft, Nvidia, ServiceNow and Amazon had repeatedly sought Israeli technologies, he wrote, in cybersecurity, cloud computing, enterprise software and AI. He described Israel as an important innovation partner for leading U.S. technology companies.

But acquisitions also shift ownership, future earnings and strategic decisions abroad, Avraham noted. Successful deals can give founders, employees, venture investors and institutional shareholders liquidity; proceeds may flow back through startups, venture funds and angel investment. Major deals can also generate tax revenues, attract foreign investment and encourage multinational companies to expand Israeli research and development. The column asked whether technology-driven growth would create lasting prosperity at home.

Venture capital continued to flow into cybersecurity, AI, fintech and enterprise software despite global volatility, while investment in AI sparked debate over which companies would capture long-term value. The Bank of Israel and banking sector were expected to reassure markets if pressure built before Monday's trading. The bank executive said the Bank of Israel was already addressing the issue; the impact of Netanyahu's remarks would become clearer when trading resumed.