ISRAELI STATE BONDS are back in the news after the Central Bank was asked to clarify whether it is once again approving their sale.

The Irish regulator was responsible for approving the bonds for European investors since 2021, before Luxembourg took up the role in September 2025.

But since the arrangement between Israel and Luxembourg’s Commission de Surveillance du Secteur Financier (CSSF) expired on Tuesday, questions have been asked about whether the responsibility has shifted back to Ireland’s Central Bank.

That has proved controversial in the past, with Irish opponents describing the loans as “war bonds” because they claim the bonds have been used to finance Israel’s genocide in Gaza.

It’s still unclear which EU member state, if any, is now approving Israel’s bonds in Europe.

What are Israel Bonds?

We should probably start by explaining what a bond is.

In simple terms, bonds are massive IOUs issued by governments or companies when they want to borrow money from investors.

Investors lend the bond issuer money for a set period, and usually receive interest in return before the original sum is repaid when the bond matures.

Government bonds are generally considered relatively low-risk investments because sovereign governments are less likely to default than many private borrowers – although they are not risk-free.

The bonds themselves are issued by the State of Israel and marketed under the Israel Bonds name by the official underwriter, which is called the Development Company for Israel.

On the Israel Bonds website, the bonds are described as a financial instrument that supports “Israel’s economic development” and as “a direct and impactful way to invest in support of Israel”.

Are they “war bonds”?

It’s slightly complicated.

“War bonds” are a very specific form of bond that are sold during wartime as a way to finance a country’s war effort – like Ukraine did when Russia invaded in 2022.

Israel Bonds are not ring-fenced to fund the Israel Defence Forces or the country’s war on Gaza; for example, its 2025 US prospectus said that the net proceeds of the debt that is issued would be used “for general purposes of the State”.

But Israel has borrowed more heavily since the war in Gaza broke out, and it’s logically impossible to claim that “general purposes of the State” doesn’t include military spending.

The distinction has become even more murky since 7 October 2023, when Hamas attacked Israel and the latter responded by launching a full-scale war in Gaza that a UN Commission of Inquiry has since concluded amounts to genocide.

Israel Bonds has explicitly marketed the bonds by reference to the war, including a notice on its website in the early stages of the conflict that it had received “over $200 million in bond sales and commitments from investors since the war began”.

The organisation that sells the bonds also published an appeal from Israeli president Isaac Herzog saying that Israel Bonds had a “crucial role” during the period of “conflict and war”, urging supporters to continue buying them.

So while Israel Bonds are not “war bonds” in the traditional, ring-fenced sense, they provide general financing to the Israeli state at a time of sharply increased military spending – and have explicitly been marketed by reference to the war.

Palestinians inspect damage at the site of an Israeli strike in the Tel al-Hawa neighborhood of Gaza City this week Hashem Zimmo / JNA Press via Nexpher Images Hashem Zimmo / JNA Press via Nexpher Images / JNA Press via Nexpher Images

Where does Ireland’s Central Bank come into it?

The role of the Central Bank has made Israel Bonds of particular interest to Ireland.

To offer bonds to the public across the EU, an issuer such as Israel generally needs a prospectus approved by the competent regulator in its EU “home Member State”.

In practice, that doesn’t mean the issuer is based there.

A non-EU issuer like Israel can generally choose the Member State where it first offers the bonds or seeks to have them admitted to trading, making that country’s regulator its “home” authority for the prospectus.

Israel previously had its bonds approved for the European market in the UK, but after Brexit, this moved to Ireland under the supervision of the Central Bank.

Ireland effectively became the regulatory gateway into the EU market for Israel Bonds, even though most of the bonds were being marketed and bought elsewhere.

After the war in Gaza broke out, pro-Palestinian groups portrayed this process as the Irish Central Bank having an indirect role in the funding of Israel’s war.

There have been multiple protests outside Central Bank HQ and calls from opposition politicians for the regulator to stop approving Israel Bonds since.

The Central Bank has said its remit doesn’t give it the scope to make morality calls on bond sales.

That’s because the regulator only approved Israel’s bond prospectus, which is basically the financial instrument used to sell bonds on Israel’s behalf.

Related Reads

Central Bank boss says ICJ opinion not considered in Israeli 'war bonds' transfer to Luxembourg

Analysis: How Ireland’s Central Bank avoided making a decision on the sale of Israel’s ‘war bonds’

Why are pro-Palestine groups calling for Ireland to prevent the sale of Israeli 'war bonds'?

The criteria used to judge bond prospectus documents do not cover the morality of the transaction; they only look at it to see if the prospectus complies with risk and financial guidelines.

And that means the Central Bank had to approve the prospectus under EU rules if it complied with those guidelines – even if the money ended up being used to fund the conflict in Gaza.

To use an analogy, the Central Bank’s role is a bit like performing an NCT on a vehicle: it can check whether a car meets a set of technical requirements, but allowing the car to pass the test says nothing about where its owner intends to take it or how they’ll drive it.

For the past year, the approval process has moved to Luxembourg, but Luxembourg only agreed to oversee the approval of the Israeli prospectus until 1 September.

And what’s been happening this week?

There’s now confusion whether the process has reverted to Ireland, because we are designated as Israel’s ‘home member state’.

The Currency reported earlier this week that it doesn’t look like anyone in Europe is approving the Israeli prospectus since 1 September.

Queries from The Journal to the Central Bank, the Department of Finance, Luxembourg’s financial regulator and the Israeli finance ministry did not result in any clarity either.

The European Markets and Securities Agency, which oversees the EU’s securities regulatory framework, also said it not had received any notification about “a possible transfer of approval relating to a new State of Israel prospectus” in 2026.

When responsibility transferred to Luxembourg a year ago, the prospectus explicitly said the move was valid for 12 months.

Analysts pointed out that approval would then default to Ireland as Israel’s home member state in the EU; the Central Bank had transferred responsibility for approving the 2025 prospectus to Luxembourg, rather than permanently transferring Ireland’s underlying role.

Israel’s application for approval of its prospectus would have needed to be made to Ireland by the end of August, so it’s entirely possible the Central Bank knows more than it’s letting on.

A spokesperson told The Journal earlier this week that the regulator is “bound by statutory professional secrecy obligations” which meant it could not disclose information “relating to live supervisory matters”.

That isn’t to say that Israel’s prospectus is being approved here either – but responses like that mean calls for clarity on the issue, as there have been this week, are a bit more pressing.