Author: Matthew Davis / Source: Big Think
- When giving out a secured loan, most banks ask for a form of collateral to recoup their losses in case the borrower defaults.
- Most people put up their homes as collateral, but one bank in Italy accepts wheels of delicious, sharp, and valuable cheese.
- It might seem bizarre, but it’s not the first time unusual items have been used as collateral.
If you were to take out a loan for buying a home — a mortgage — you would offer up your house as collateral to the bank. If you can’t make your payments, the bank will take your house back to recoup its losses. If you were a farmer, your collateral might instead be the tractors and combines necessary to conduct your business. Normally, this stuff doesn’t exactly make for great party conversations.
However, if you were, say, a small business owner in the Italian city of Reggio Emilia, you could ask the bank Credito Emiliano for a loan. Credem — as the bank is informally known — will accept traditional assets as collateral as well as something a bit more unorthodox: wheels of Parmigiano-Reggiano, also known as “The King of Cheese.”
The high cost of good cheese
Photo credit: FILIPPO MONTEFORTE/AFP/Getty Images
Real Parmigiano-Reggiano can only be made in a few provinces in Italy, specifically Parma, Reggio Emilia, Bologna, Modena, and Mantua. Similar cheeses produced outside of those regions are known as parmesan, but they don’t hold a candle to the real stuff. The roughly 80-lb wheels of Parmigiano-Reggiano have a deliciously sharp, nutty, and fruity taste, produced according to a strict set of rules that define the cow’s diet, how fresh the cow’s milk can be, what ingredients can be used, how long the cheese can be aged, and other stipulations. The result is an incomparable taste and a lot of value: One wheel of Parmigiano-Reggiano can range anywhere between $900 and $2,500.
The trouble is, producing and aging the cheese is a delicate process. Parmigiano-Reggiano can take between 12 and 36 months to fully age, and a lot can go wrong in the interim. Under the wrong conditions, the cheeses can sweat, bubble, or crack. Too many cracks in the exterior of the…
The post This bank in Italy accepted cheese as collateral. Here’s why. appeared first on FeedBox.