Cash-for-Cheese Loans

Cheap loans in exchange for Parmesan cheese

#Money

Fri, Feb 20th, 2015 11:00 by capnasty NEWS

According to CNN, Italy's Credem Bank works much like a regular financial establishment, except for the fact that it provides cheap loans to local dairy producers in exchange for wheels of Parmesan cheese. If the producer defaults on the loan, the bank sells the wheel of cheese.

In simple terms, the bank takes the cheese from local parmesan producers in exchange for a cheap loan. It charges between 3% to 5% interest, depending on the quality of the cheese, and a fee for making sure the cheese matures properly in their air-conditioned, humidified vault.

This mechanism ensures that in the two years it takes the cheese to mature, credit keeps flowing. In these tough economic times, this allows producers to feed their cattle, pay their staff....and just keep producing. If for whatever reason, the cheese producer defaults on the loan, the bank has the cheese to sell on.

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