Israel’s central bank has publicly shot down Prime Minister Benjamin Netanyahu’s suggestion that cryptocurrency could shield the economy from possible international banking sanctions, an unusually open break between the country’s monetary authority and its political leadership just days before a national election.

The Bank of Israel said in an Oct. 24 statement that digital currencies are not a viable tool for sidestepping financial restrictions, and it pressed the government to protect commercial ties with Israel’s leading trading partners rather than plan around their loss. Managing the diplomacy that determines whether sanctions are imposed, the bank added, is the government’s own job.

Netanyahu had raised the idea a day earlier in…