For better or for worse, “creativity” isn’t typically associated with banking and finance, but it really should be.   

Yes, the arts gave us movies, paintings, and sculptures. But think about all the things banking and finance gave us: collateralized debt obligations, loans backed by whiskey and wine, and of course, “Bowie Bonds”—asset-backed securities backed by David Bowie’s music royalties.¹ 

But maybe the most creative loans of all are those backed by cheese. And not just any cheese—the King of Cheese: Parmigiano-Reggiano. 

Leave it to the Italians, some of history’s most famous bankers, to come up with one of the most creative ways of getting funds out to the folks. 

Credito Emiliano has been using the young version of the King of Cheese as collateral for loans for decades, dating all the way back to the 1950s.² In fact, one of its subsidiaries currently holds more than €300M worth of the good stuff.  

And while it may seem odd, it actually makes a lot of sense. Like Champagne—or German beer brewed under the Reinheitsgebot, the German Purity Law—Parmigiano-Reggiano is tightly regulated by origin, ingredients, and age. Because the cheese takes such a long time to mature, anywhere from 12 to 48 months, farmers need cash flow today. This quirky lending scheme helps provide it.

Good-quality stuff makes for good-quality collateral, which keeps farmers happy and keeps the good stuff—cheese—coming.

Most of the time.  

Here’s the problem with cheese, though.  

Unlike collateral such as an Italian car, cheese melts in the heat. As large swaths of Europe experience some of the hottest temperatures on record,³ that becomes a big problem when the “wheels” you’re lending against aren’t made of rubber.  

The heat drives up energy costs, particularly for cooling, while requiring upgrades to insulation and infrastructure.  

Beyond that, it creates a massive supply-chain problem, starting at the source. Like most people, cows don’t love the heat. When it’s too hot, they eat less and lie around more, ultimately affecting both the quality and quantity of their milk.  

Who knew cheese could be the binding force bringing together economics, banking, and great food?  

Fortunately, unlike collateralized debt obligations, melted cheese-backed loans probably won’t take down the entire global financial system.  

But they could potentially make your pastas and salads a lot more expensive—should you choose to partake—or a lot less interesting, should you abstain.  

Until next time.  

DEFINITIONS

A collateralized debt obligation (CDO) is a financial product that bundles many loans or debts together and sells them to investors, who receive payments as those loans are repaid. 

END NOTES

¹Chen, James. “Bowie Bonds: How Music Royalties Changed Investment.” Investopedia. 23 May 2026.

²Mealha, Quirino. “Extreme Heat Strains Italy’s ‘Cheese Banks,’ Where Parmigiano Backs Farm Loans.” Euronews. 11 August 2026.

³“Western Europe Records Hottest June on Record.” United Nations. 10 August 2026.

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