Italy's heat waves have put the country's "cheese banks" at risk, which store wheels as collateral to grant loans, Euro News reported on Aug. 11. Italy has the largest variety of cheeses of a
Italy's heat waves have put the country's "cheese banks" at risk, which store wheels as collateral to grant loans, Euro News reported on Aug. 11.
Italy has the largest variety of cheeses of any nation in the world, with over 2,500 traditional varieties. The Mediterranean country's economy is also deeply tied to its cheese industry.
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The country has a long tradition of "cheese banks," the climate-controlled vaults in the Emilia-Romagna region where enormous quantities of Parmigiano Reggiano cheese are kept as collateral for farm loans.
Parmigiano Reggiano or Parmesan is a hard and granular cheese produced from cow's milk and aged at least 12 months. The variety is named after the Italian provinces of Parma and Reggio Emilia where it is produced. Parmigiano is the Italian adjective for the city and province of Parma and Reggiano is the adjective for the province of Reggio Emilia.
The logo of Parmigiano Reggiano is pictured on a wheel of cheese at the Casearia Castelli, member of Lactalis Group, at the Caseificio Tricolore in Reggio Emilia, Northern Italy, on April 19, 2023. Getty Images
Credito Emiliano is an Italian bank well-known for storing wheels of Parmigiano Reggiano cheese as collateral for loans since 1953.
Its subsidiary, Magazzini Generali delle Tagliate, matures the cheese in Reggio Emilia and Modena, holding more than half a million wheels worth well over €300 million. Cheese producers can secure 60%-80% of a wheel's value upfront when they collateralize it.
The industry is also using blockchain technology to digitize the loan process, the Euro News report said.
Blockchain technology is a decentralized digital ledger that stores data across a network of computers. Information is grouped into blocks and linked together in a chronological chain. Once recorded, the data cannot be changed without the network consensus, making it safe from tampering.
Thanks to this technology, farmers can even pledge wheels onchain while the cheese stays in their own stores.
However, "cheese banks," which store wheels in vaults as collateral, are still prevalent.
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But the extreme heat in the region this summer is making it risky to keep the inventory at the right temperature, the report said.
Daily power consumption at the cheese vaults rose roughly 30% at the peak of this summer, which forced the bank to upgrade cooling and other systems.
As wheels sometimes mature for three years, every hot summer compounds the cost long before the cheese can be sold, as per the report.
This year's summer is turning out to be one of the hottest in the country's recorded history.
Here is how things get worse. As the temperature hits 40°C, cows rest more and eat less, due to which milk yields reduce by as much as 10%.
"Extreme heat impacts milk's quality and quantity," said the Parmigiano Reggiano Consortium's president Nicola Bertinelli.
Launched in 2020, Polymarket is the world’s largest prediction market. It is built on Polygon, the Ethereum-based layer-2 blockchain network.
The prediction market lets traders predict events like future Bitcoin (BTC) prices, election results, temperature, etc., by paying with cryptocurrency.
Users can deposit Circle's USDC stablecoin, a type of digital dollar, and trade shares that represent the likelihood of specific future outcomes.
As Italy put all 27 of its major cities on the highest heat alert last week, Polymarket traders are betting on the highest temperature in Milan.
Milan is not only Italy's economic capital, it is also a global fashion capital and an international tourist destination. Tourists flocking to the city seek famed Italian cheeses, and the delicacies are a major part of the food tours.
As the tourist city, like other parts of the country, sees its temperature soaring, authorities have warned people to avoid direct sunlight between peak daytime hours, to stay indoors where possible, and to drink at least 1.5 liters of water a day. Tourists could also rethink their Milan plans due to the heatwave.
Highest temperature in Milan on August 13, Source: Polymarket Amidst these conditions, Polymarket traders are betting on the highest temperature in Milan on Aug. 13.
41% of the Polymarket traders think the city's temperature will go as high as 35°C, 37% of them think 34°C, and 16% of them are betting it will be as high as 36°C.
Less than 1% of the traders think Milan's temperature on Aug. 13 will reach 39°C or higher.
As per the World Meteorological Organization, Milan's temperature stood at 34°C at the time of writing on Aug. 11.
Milan, Italy temperature, WMOHowever, such weather-related markets have also faced criticism.
For instance, some U.S. senators recently urged a ban on wildfire-related bets in the wake of Oregon wildfires because they incentivize traders to commit arson or act mischievous to make sure their bets are successful.
"When tragedy unfolds, people turn to the news for commentary and they come to Polymarket for information," A Polymarket spokesperson then told TheStreet Roundtable. "While we are not blind to the risks, removing these markets does not prevent a tragedy but makes the most accurate information less accessible to the people who need it most.”
As reported earlier, a trader betting on Paris temperature in April was found to be manipulating a sensor device to ensure they win the related market.
So, Polymarket trades are highly sensitive and aren't immune to unfair practices.
