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Comment by ktizo | Hacker News Reader

So, banks like barclays have been treating diamonds like money, and Russia chooses now to try and upset the diamond industry.

This should be fun.

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> So, banks like barclays have been treating diamonds like money

Citation needed. Any appraiser with half a brain knows that diamonds' resale value is almost none. I'd be surprised to find a bank putting their money in diamonds. With toxic assets you'd have at least a chance of resale before the inevitable bust.

"Last September, Israel's major banks quietly informed the Israeli government that they faced losses of disastrous proportions from defaulted accounts almost entirely collateralized with diamonds. Three of Israel's largest banks—the Union Bank of Israel, the Israel Discount Bank, and Barclays Discount Bank—had loans of some $660 million outstanding to diamond dealers, which constituted a significant portion of the bank debt in Israel. To be sure, not all of these loans were in jeopardy; but, according to bank estimates, defaults in diamond accounts rose to 20 percent of their loan portfolios. The crisis had to be resolved either by selling the diamonds that had been put up as collateral, which might precipitate a worldwide selling panic, or by some sort of outside assistance from the Israeli government or De Beers or both. The negotiations provided only stopgap assistance: De Beers would buy back a small proportion of the diamonds, and the Israeli government would not force the banks to conform to banking regulations that would result in the liquidation of the stockpile."

from the article about trying to sell diamonds - http://www.theatlantic.com/magazine/archive/1982/02/have-you...

Article from 1982, less relevant today. No bank today would ever use diamond as an asset or collateral.

oh shit.. Excuse my dumbness for not checking the date on it.

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