In 2002 Jordanian business were dealt JD 85 million in bad debt through some 80,000 bad checks in the months of January and February alone. The number is JD 10 million less than 2000 but remains a highly significant figure. Many businessmen and investors now suggest the problem could jeopardize the commerce and credibility of Jordan's financial system.

Passing bad, or rubber checks is an issue so such significance that local economists many businessmen are not confident enough in the checking system, insisting upon cash payments.

The Central Bank is pursuing legal actions against those who write bad checks. According to the law bad checks writers are subject to two-years in prison and/or fines of JD 200.

Other proposals have been heard amongst economists who urge banks to issue "black lists" of those who write bad checks. They've also suggested banks create checks of unique color schemes to designate the credit worthiness of the presenter. Economists believe the current legal punishments rubber check writers are nearly impotent and far below levels required to present a deterrent.

Businessmen are criticizing the government's reluctance to re-activate its cooperation with local banks and the private sector in order to fight the crisis more efficiently. The businessmen believe a practical bilateral solution is a must as long as the private sector and local banks are so affected by the problem.

Economist Yousef Mansour warns the increasing number and value of bad checks hinders government efforts to increase foreign investment. He points to last year's statistics showing a high water mark for the number amount of bad checks passed in the Kingdom.

The 2001 statistics from the Central Bank of Jordan indicate bounced checks that year reached JD 515.2 million-a 10 percent increase over 1999's numbers. The statistics also show overall the value of circulated checks in Jordan to be worth some JD 12.6 billion.

"The value of bad checks last year constituted about nine percent of the Kingdom's GDP," Mansour said. "It is a fact that forces every businessman or investor to think twice before setting up businesses in the Kingdom."

A quick reading of bad check financial data over the past six years (1995-2001), shows the value of bad checks has always been a large percentage of the total value of the checks. In other words, many of the checks written do not have adequate funds and are returned to the presenter leaving the merchant unpaid. The value of bounced checks has gone as high as 10 percent over the last two years. In 1998 it was 17.5 percent, the highest of the decade.

Economists believe some of the increase is due to revenues local businessmen expected from outside investors that never arrived. Checks were written on anticipated funds, but went unpaid as the investments fell through. The 1994 peace treaty between Jordan and Israel pushed the door wide open for local businessmen to have joint ventures with foreign counterparts who left them without promised funding as situations in the region grew tense.

Mansour agrees saying, "The bad check crisis was under the government's influence in the 1980s. Soon after the Gulf War the crisis showed a gradual influence on the local economy, thanks to many businessmen who went after false ventures to make quick money."

The role of local banks is extremely important to finding a solution to what has really become a crisis in the local economy. Local banks still refuse to share their financial information, believing such information is confidential and any such revelations will erode customer trust in the banking sector. This is one reason why economists have praised the idea of a credit bureau system in the Kingdom, partly to control the spread of rubber checks.

A credit bureau will have the authorization to obtain information necessary to protect the rights of local banks and their customers while still providing monitoring necessary to quell the growing trend. Mansour notes such a bureau would make reporting information more efficient by implementing required mechanisms guaranteed to make the system more competent.

"As long as a credit bureau is founded trust between merchants and those who write checks will be promoted," Mansour suggested. Indeed, the lack of credit information about check writers concerns the majority of merchants and businessmen.

"Many credit bureaus in Europe are now providing a thorough database of information to business people and merchants who potentially deal with checks. This information is gathered through different credit guarantors, banks and retailers," explained Mansour, concluding that Jordan needs to see a similar implementation soon.