In Milan, some bank employees are assigned to care for the collateral. Rather than examine credit spreads and market indicators, however, they are focused on temperatures in a warehouse and the centuries of tradition that have come to define making Parmesan cheese.
Some banks are allowing manufacturers to use their product as collateral -- but not in the traditional sense. The notion of using underlying goods to secure a loan isn't new. But, in this uniquely Milanese transaction, 85-pound wheels of Parmesan cheese are put up as collateral during their aging periods. Parmesan has to sit in a climate-controlled vault for up to two years, and the producers have found a way to make there inventory productive when it normally would only take up space.