Luxury fashion house Hermes has created one of the world's most expensive handbags.

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Hermes has defied the current luxury backlash by creating a near $2 million pure gold handbag.

The premium fashion house, which is famous for producing a number of luxury handbags including the iconic ‘Birkin’, has added four of the solid gold ‘Kelly’ creations to its collection.

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Hermes enlisted the help of jeweller and shoemaker Pierre Hardy to create the bags, which are adorned with 1,600 diamonds and reportedly took two years to complete. According to the Financial Times, the four miniature styles, which are barely large enough to hold a wallet, will be recreated just three times each to ensure their exclusivity.

Despite the extravagant nature of the handbag, Hermes is confident all four styles will sell at the $2 million mark, with CEO Patrick Thomas stating, “I have no idea [who will buy them] but maybe they will have two bodyguards! But there’s no doubt these bags will be bought.”

Thomas said that although the current economic climate wasn’t ideal for launch, the company was willing to take the risk. “We are a little crazy here,” he joked.