Italian bank's 'grate' move to accept Parmigiano-Reggiano cheese as collateral for loans
The longer it ages, the more delicious and valuable it becomes – much like money growing in an interest-bearing account.
Parmigiano Reggiano / Pixabay: zalazaksunca
Sara-Jayne Makwala King interviews Barbara Friedman about this and other trending news on the web.
Listen below (skip to 06:05).
Since 1953, the regional bank Credito Emiliano has had a cheesy twist on small-business loans: accepting giant wheels of Parmigiano-Reggiano cheese as collateral.
Locally known as Credem, the bank is now featured in a Harvard Business School case study titled "Credem: Banking on Cheese."
The case delves into how Credem turns an expensive operational hurdle for dairy farmers in the Emilia Romagna region of Northern Italy into a unique financial strategy.
Instead of just holding the cheese as insurance, the bank stores and ages the wheels in climate-controlled vaults for the loan’s duration.
The longer it ages, the more delicious and valuable it becomes – much like money growing in an interest-bearing account.
This arrangement not only saves farmers on operating costs but also allows the bank to gain valuable insight into a high-risk industry.
"Whatever it is that you need a bank loan for, you need some kind collateral...this particular bank will accept your wheel of cheese."
- Barbara Friedman
Scroll up to the audio player to listen to the interview.