February 11, 2023

 

Dr. Nidal Al-Azzam, Executive Director of the Research Department at the Central Bank, delivered a lecture on Thursday titled "Early Warning Systems and Economic Crises" to scholars in the Defense Course (21) and the Master's Program in Strategies for Countering Extremism and Terrorism (7). 

The lecture was attended by the College Commandant, Brigadier General Azzam Al-Rawahneh, and the head and members of the College's directing staff.

 

During the lecture, Al-Azzam reviewed the theoretical framework of financial and economic crises and their stages of development, emphasizing that the existence of an early warning system to detect various crises, including economic ones, is no longer a luxury but rather an urgent necessity imposed by reality, especially as the world is more vulnerable than ever to diverse crises of varying origins, such as health crises, natural disasters resulting from climate change, security disturbances, and economic crises.

 

Al-Azzam also reviewed the essential elements for designing an integrated early warning system for economic and financial crises, highlighting the Central Bank's experience in this field. This system is based on monitoring and analyzing the behavior of a set of macroeconomic and microeconomic indicators, along with the use of statistical and metric models to detect financial and banking crises. These include the Z-score, which is used to predict bank failure; the Heat Map, which is used to assess bank performance and risks over time and to compare bank performance; the Financial Stability Index, which measures the stability of the financial system; and macro stress tests, which assume fundamental changes in macroeconomic variables that could have negative impacts on banks' conditions and measure banks' ability to confront them.

 

Al-Azzam emphasized that all economic and monetary indicators today indicate that the national economy is stable and capable of flexibly dealing with various challenges. He emphasized that Jordan's historical experience in dealing with crises is replete with successes that consistently receive international acclaim.

 

At the end of the lecture, an extensive discussion took place during which the lecturer answered the audience's questions and inquiries.