#TIL #CreditoEmiliano #ParmigianoReggiano #CheeseBankLoans
🧀 Did you know that since 1953, a little-known Italian regional bank called Credito Emiliano has been accepting giant wheels of Parmigiano-Reggiano cheese as collateral for small-business loans? It may sound like a bizarre concept, but the bank has been doing it for decades with great success.
In this article, we’ll take a deeper dive into this unique banking practice, exploring the history behind it, the benefits it offers, and the implications it may have for the future of small-business lending. So grab a slice of cheese and settle in as we explore the world of Parmigiano-Reggiano collateralized loans.
—
## History of Credito Emiliano’s Cheese Collateral Loans
Credito Emiliano is a regional bank located in the Emilia-Romagna region of Italy, which is famous for its production of Parmigiano-Reggiano cheese. The practice of using cheese as collateral began in 1953 when a local farmer approached the bank with a unique request. He needed a loan to support his small cheese-making operation but had no other assets to offer as collateral.
In a stroke of genius, the bank’s president at the time, Giorgio Gori, decided to accept the farmer’s wheels of Parmigiano-Reggiano as security for the loan. The idea proved to be a win-win situation, as it provided the farmer with the funds he needed while also giving the bank a valuable and tangible form of collateral.
Since then, Credito Emiliano has continued to accept Parmigiano-Reggiano as collateral, and the practice has grown to become a significant part of the bank’s lending portfolio. Today, the bank holds thousands of cheese wheels in its climate-controlled vaults, aging them to perfection until the loans are repaid.
—
## Benefits of Cheese Collateral Loans
The concept of using cheese as collateral may seem unusual, but it has proven to be a successful and mutually beneficial arrangement for both the bank and its borrowers. Here are some of the key benefits of this unique form of small-business lending:
1. **Access to Financing:** For small cheese makers and other local businesses in the Emilia-Romagna region, traditional financing options can be limited. By accepting Parmigiano-Reggiano as collateral, Credito Emiliano provides these entrepreneurs with much-needed access to capital, enabling them to grow and thrive.
2. **Risk Mitigation:** While traditional loans may rely on intangible assets or credit history as collateral, Parmigiano-Reggiano cheese provides the bank with a tangible and valuable asset. In the event of default, the bank can recoup its losses by selling the aged cheese on the market, making it a lower-risk form of lending.
3. **Cultural Preservation:** Emilia-Romagna is world-renowned for its production of Parmigiano-Reggiano, and Credito Emiliano’s cheese collateral loans help support and preserve this important cultural tradition. By providing financial support to local cheese makers, the bank contributes to the continued success and sustainability of the region’s cheese industry.
—
## Implications for Small-Business Lending
The success of Credito Emiliano’s cheese collateral loans raises interesting questions about the future of small-business lending, both in Italy and around the world. Could this unique form of collateralization serve as a model for other banks? What lessons can be learned from this innovative approach to lending? Here are a few implications to consider:
1. **Creative Collateral:** Credito Emiliano’s use of Parmigiano-Reggiano as collateral demonstrates the potential for creativity in small-business lending. Instead of being limited to traditional assets, banks could explore innovative forms of collateral that hold real value for their borrowers.
2. **Localized Lending:** The success of cheese collateral loans highlights the importance of localized lending practices. By understanding the unique needs and assets of their local communities, banks can develop tailored lending solutions that support small businesses and drive economic growth.
3. **Risk Management:** While unorthodox, the use of cheese as collateral has proven to be a sound risk management strategy for Credito Emiliano. This could prompt other banks to rethink their approaches to collateralization and explore new ways to mitigate lending risks.
—
In conclusion, the story of Credito Emiliano’s Parmigiano-Reggiano collateral loans is a fascinating example of innovation in small-business lending. By accepting cheese wheels as collateral, the bank has provided vital support to local entrepreneurs while simultaneously preserving a cherished cultural tradition. As the banking industry continues to evolve, this unique practice offers valuable insights into the potential for creative, localized, and risk-mitigating lending solutions. Who knows, maybe your next loan could be secured by a wheel of fine Parmesan!
Screams for Mouse’s 11, eh?
*But father, I don’t want to be a banker like you. I want to be a cheese monger!*
I am glad the cheese is safe in queso emergency.
Fun fact: You can buy Parmigiano-Reggiano wheels from Costco as well as the coffin you’ll eventually need from overindulging in your Costco cheese wheel.
It’s like collecting interest on cheese by aging it lol truly remarkable
so, as the cheese ages, it becomes more valuable, what happens if the cheese becomes more worth than the debt?
One of my work colleagues lives in Italy. He loves telling the story of when the earthquake happened a number of years ago and a lot of the Parmigiano storage collapses, opening up the cheese wheels.
He says that for a couple months afterwards all the restaurants had specials loaded with cheese, and all grocery stores sold broken wheels for basically nothing. He said it was a bad time to be cheese, a worse time to be wine, and an even worse time to be a belt.
I wonder if you could get better terms for a Provo-Loan?
What else did banks store in climate-controlled vaults, not necessarily as collateral for loans?
“If you’re not completely satisfied with this Kirkland Signature product, your money will be refunded.
Standard shipping is via UPS 2nd Day Air.”
Uhh, yeah, pretty sure you’re looking at a freight charge for a 72lb wheel of cheese.
Cheese vault
SubhanaAllah
Time for a cheese heist.
Who Moved My Cheese?
This TIL reminds me of an old joke where this rich man goes to a bank and gets a multi million dollar loan but he wants to have only a 1 year term on the loan. he negotiates a fairly reasonable interest rate on the loan, by putting his prize possession his most expensive car up as collateral. The bank manager says that for the amount that he is taking the loan for and the low interest rate, he apologizes but the bank would need him to surrender the car to them for the duration of the loan.
The manager then suggests that this loan is a bit silly, the man is obviously well off. Why would he risk his car, what if he cannot repay the loan in time. The man scoffs and gives the manager the keys.
A month later, the man arrives at the bank, pays the loan off plus the agreed interest and gets his keys back. Before the man leaves, the manager notices that there were no withdrawals out of the account and is dumbfounded so he just blurts out asking the man why he went to all this trouble.
The man winks a the manager and said that him and his wife went on vacation, where he couldn’t bring the car, and the interest on the loan was much less than the quotes that he got from local security companies for the year. Plus he knew that if he got a big enough loan, the bank would be very interested in making sure nothing happened to the car.
That vault must smell amazing.
House of Games, OP?
what about individually wrapped slices of Parmigiano from Nestle?
I, too, watched House of Games last night.
Reminds me of that quote “*When the last tree is cut down, the last fish eaten, and the last stream poisoned, you will realize that you cannot eat money*” and I’m thinking these Italians are onto something
What I’m hearing is that if I take out a loan, claiming it’s for a business I don’t actually have, they’ll age my cheese for me. Then I just need to give them their loan back.
Anybody want to sell?
Samuel Pepys buried his wheel of Parmesan in his garden to save it during the Great Fire of London.
Are the small businesses cheese manufacturers or do Italians just regularly have large caches of cheese on hand?
Edit: Maybe it just makes good business sense if the cheese appreciates in value at a higher rate than the loans interest rate. Buy cheese with cash, deposit at bank as collateral for loan to get your cash back. Pay off the loan while the cheese ages at the bank. Then sell the cheese for profit.
This honestly sounds like satire or parody. It’s one of those facts that people in the pub will google to verify if they overheard it.
Hmm, something smells about this plan…
wild
so the bank gets the loan paid back with interest and the client gets the cheese back as an asset that has appreciated in value. everybody wins.