Commodity lombard credit

from Wikipedia, the free encyclopedia

The commodity Lombard credit is a form of Lombard credit in which goods are pledged as security .

As with other forms of Lombard credit, the commodity Lombard takes place through the agreement between the owner of a thing and the creditor and the transfer of the pledge to the creditor.

However, there are limits to the goods lombard, as not all goods, due to their durability and value, are suitable as a deposit (e.g. bananas, because these are perishable and of low value).

The lender is secured twice here. On the one hand through the personal liability of the borrower (repayment + interest), on the other hand through his acquired right in rem , which allows the lender to realize the pledge if his claim is not met. The lien expires as soon as the borrower has repaid his liability or the lender has returned the pledge to the borrower.

properties

advantages

  • The borrower can raise money relatively quickly without having to sell the thing.
  • The lender receives a security in rem.

disadvantage

  • The borrower loses direct possession of the thing. He has no access because the goods are in the lender's possession.
  • The lender undertakes to keep the thing safe. (This incurs additional costs, e.g. storage costs.)

To cover the ancillary costs and to reduce the risk of depreciation, a lending limit comes into effect.

The commodity bomb no longer has any practical significance today.