This Italian bank uses wheels of parmesan instead of Gold for people to borrow against.
A bank in Italy’s Emilia-Romagna region, Credito Emiliano allows its customers to use wheels of parmesan as collateral for loans.
The bank in question apparently holds around 430,000 wheels of Parmigiano-Reggiano made by farmers in the area which are worth around €190 million which is almost $300 million AUD.
Of course, the Credito Emiliano is a high-security complex surrounded by barbed wire to ensure the safety of the assets.
An assistant professor in Technology and Operations Management unit at Harvard Business School (HBS), Nikolaos Trichakis told Forbes why the Italian bank would need to accept cheese as collateral for loans.
“The producers face very long lead times,” he said.
“They basically have working capital tied to inventory for two years.”
Under Italian law, to qualify as D.O.C. Parmesan, it must be made in either Bologna, Mantua, Modena or Parma and the exact recipe and process the cheesemaker must use, along with the ageing requirements, can take up to 36 months.
Basically, it can take farmers in this region years to turn their assets into capital and this bank has found quite an amazing work around that.