EU bond market stalls as Israeli securities face de facto €2.2bn sanction

European investors are presently unable to purchase Israeli government bonds, a situation that functions as an unofficial sanction estimated at €2.2 billion annually. The blockage stems from the need for a member-state regulator to approve Israel Bonds’ prospectuses, a task formerly handled by the Central Bank of Ireland under a 2017 EU law. In 2025 the responsibility was transferred to Luxembourg’s Commission de Surveillance du Secteur Financier, which terminated the role on 31 August amid widespread public disgust over Israel’s conduct in Gaza.

Consequently, the approval mandate automatically reverted to the Irish central bank on 1 September, presenting three options: resume approvals, pass the duty to another sympathetic country such as Germany, or simply refuse further approvals. The process is shrouded in secrecy because of strict financial-privacy regulations and its political sensitivity. Meanwhile, the EU remains unable to formally prohibit even €250 million of imports from illegal settlements.