Central Bank 'cannot impose sanctions on Israel' as regulator scutinised over role in sale of 'war bonds'

Governor Gabriel Makhlouf said the central bank's obligations were clear and that it 'did not need guidance to follow them'

Central Bank of Ireland Governor Gabriel Makhlouf. 'We have to work within the law, and the prospectus issued by the State of Israel meets the standards of completeness, consistency and comprehensibility required by the law.'

The governor of the Central Bank of Ireland Gabriel Makhlouf has defended the bank's role in the sale of Israeli sovereign bonds, telling government officials that it is legally required to perform and exercise its responsibility in approving their prospectus, as determined on an EU level.

The regulator is facing mounting pressure to reject the prospectuses of Israeli bonds, which are largely being used to fund the country's war efforts in Gaza.

Ireland's central bank is designated as the competent authority to approve prospectuses for Israeli bonds sold in the EU.

Third-country issuers, those being countries outside the EU, must choose the central bank of a country within the EU as their Home Member State. The choice is up to the issuer, with the chosen central bank only able to object if it believes it does not have legal jurisdiction for the approval.

Before 2021, the UK was the EU Home Member State for Israel. Following their exit from the bloc, Ireland was chosen by Israel as the new Home Member State.

The Central Bank of Ireland approved the first prospectuses for the bond issuance program in 2021, with the currently approved prospectus due to expire on September 1, 2025.

"Should the State of Israel seek a further approval of its bond prospectus, we will ensure that the review process is carried out in line with the requirements of the Prospectus Regulation," Mr Makhlouf told a Joint Committee on Finance, Public Expenditure, Public Service Reform and Digitalisation, and Taoiseach on Wednesday.

"We have to work within the law, and the prospectus issued by the State of Israel meets the standards of completeness, consistency and comprehensibility required by the law," the governor said in his opening statement.

"Our legal obligations are clear and we do not need guidance to follow them."

In the past 18 months, Israeli bonds have been used as a means to support the country’s war efforts in Gaza and the Middle East. In the 16 months from October 2023 to January 2025, Israel raised $4.5bn through the sale of bonds across the EU, according to Sinn Féin TD and chair of the Oireachtas Finance Committee, Mairéad Farrell.

The website Israelbondsintl.com, which is used for the promotion of bonds issued under the Central Bank-approved programme, includes phrases such as “Israel is at war,” “Stand with Israel now." 

It also features a quote from Israeli President Isaac Herzog calling for “unwavering support for the Jewish state” emphasising the “crucial role of Israel Bonds during this time of conflict and war.”

Addressing the Central Bank Governor, Sinn Féin TD Pearse Doherty told the joint committee meeting that the regulator was ignoring the fact that Ireland was a signatory in the Genocide Convention, which he said would allow the central bank to reject Israel's bond prospectus.

Mr Makhlouf replied by saying the Genocide Convention does not apply to the Central Bank, adding: "In the context of the prospectus regulation, it is not something that we take into account."

The governor added that the only way to prevent the central bank from approving the prospectus was through sanctions on an EU level, or national restrictive measures that are consistent with EU law. 

Addressing the meeting, Mr Doherty said: "There is enough scope for the Central Bank, if they were willing, to deal with this issue."

He added that the prospectus should include warnings that buyers of Israeli bonds could be funding a genocide. 

The Government will not be supporting a cross-party motion demanding the Central Bank end the facilitation of Israeli war bonds, which will come before the Dáil on Wednesday, and will instead table its own counter motion.