PART 23: Antichrists Revealed by Jesus Christ – The Secret Finances of the Vatican Economy

The Secret Finances of the Vatican Economy

Little-Known Facts About How the Vatican Makes Money
By Tim Parker and Robert C. Kelly
Fact-checked by Kirsten Rohrs Schmitt

Because the Vatican has published very little over the centuries about its finances and investments, most people don’t know how it makes money as a sovereign city-state with its own economy. The Vatican is located within the city of Rome, encompassing 110 acres with a population of under 1,000, making it the world’s smallest country. While the Vatican may be small in size, it has a large impact on the financial world due to its far-reaching investments, which include banking, real estate, and private enterprises.

Key Takeaways

• The Vatican is the world’s smallest country, with an economy that relies on a combination of donations, private enterprises, and investments to generate revenue.
• The Vatican’s economy is shrouded in secrecy, with some believing its financial numbers are more general than accurate.
• The Holy See is the governing body of the nation and generates money through donations; it then invests a portion of that money in stocks, bonds, and real estate.
• Vatican City generates revenue through museum admissions and the sale of coins, stamps, and publications.
• The Vatican Bank has been at the center of numerous financial scandals, prompting Pope Francis to institute reforms for financial accountability and transparency.

Holy See’s Revenue

To understand the complex economy of the Vatican, it is important to distinguish between Vatican City and the Holy See. The Holy See is the governing body of the nation. If you entered into a contract with the territory, you would do so with the Holy See in most cases. Vatican City is the physical area where the Holy See resides.

The Holy See generates revenue from Peter’s Pence, an 8th-century term for donations received from Catholics worldwide. From individuals to dioceses, the Holy See collects donations through a special department. It also gains revenue from interest and investments of its reserves.

Holy See’s Investments

Historically, the Holy See invested mainly in Italian industries, spreading its portfolio between stocks and bonds, and limiting its stake in companies to less than 6%. It has invested conservatively, choosing to buy and hold proven companies in strong industries; because of this, investments in the developing world are limited.

Recently, its investments have become more international, particularly in Western European currencies and bonds, with some activity on the New York Stock Exchange. The Holy See also has investments in real estate around the world, particularly in land and churches.

There are some investments the Holy See will not make. For example, it avoids companies that go against church values, such as pharmaceutical companies that manufacture birth control. In this respect, the Holy See’s investing is similar to faith-based investing strategies.

As of September 2024, the Vatican has been facing economic difficulties, though it continues to reform its finances to eventually reach zero-deficit spending.

Holy See’s Deficit

For many years, the Holy See has run a deficit. The Los Angeles Times reported a shortfall of$18.4 million in 2012. Officials blamed the soft European economy and the cost of paying its 2,832 employees, as well as spreading the Catholic faith through its various media outlets.

In September 2019, German Cardinal Reinhard Marx, who is in charge of the Vatican’s economic council, confirmed that Pope Francis had instructed him to reduce costs in an effort to eliminate a deficit estimated to be around 70 million euros. The exact amount is up for debate because the Vatican has not published a budget since 2015 and has been without an in-house auditor for two years.

In 2021, due to global restrictions from the health crisis, the Holy See Press Office noted it “is heavily impacted by the economic crisis generated by the COVID-19 pandemic.” As a result, Pope Francis approved a budget with a deficit of 49.7 million euros.

Although Pope Francis (and Pope Benedict XVI before him) have made efforts to make the country more transparent, its finances are still a bit of a mystery, and some believe that the numbers are more general in nature than accurate and audited. For that reason, it’s nearly impossible to gauge the financial health of the Holy See, although there’s little doubt among those who study the church that it has significant reserves.

Vatican City Revenue

In contrast to the Holy See, Vatican City receives revenue from more traditional stately ventures. With a labor force of about 4,800 employees, the city relies on a few small industries to generate money. The city itself—along with the Sistine Chapel, St. Peter’s Basilica, and the Vatican museums—draws millions of tourists and religious pilgrims each year.

The city collects revenue through museum admissions, tours, highly sought-after stamps and coins, and the sale of publications. The Vatican doesn’t disclose how much money it collects each year from these ventures.

The Vatican Bank

The role of the Vatican Bank is perhaps the most controversial and little-understood part of the Vatican’s finances. Also known as the Institute for the Works of Religion (IOR), the Vatican Bank is a private bank located in Vatican City, founded by Pope Pius XII in 1942. Over the decades, the bank has been at the center of numerous scandals and accusations of mismanagement, money laundering, and fraud.

In February 2018, the Vatican Bank announced it was charging its former bank president and his lawyer with embezzling 50 million euros through fraudulent real estate and money laundering schemes. In its 2018 annual report (released May 2019), the Vatican Bank said it was making advances in reducing money laundering and increasing financial transparency. The bank reported a profit of$19.8 million in 2018, down from its$36 million profit in 2017. The bank’s assets—valued at about$5.6 billion at the end of 2018—consisted of investments and deposits from almost 15,000 account holders, including Catholic clergy, Vatican employees, and Catholic religious orders around the world.

In 2022, Pope Francis issued a rescript clarifying that the Vatican Bank (IOR) is exclusively responsible for managing the financial assets of the Holy See and its connected institutions. This directive, issued on August 23, enforced the transfer of all financial assets held outside of the IOR to the Vatican Bank within 30 days of September 1, 2022.

Pope Francis also issued a new statute for the Vatican Bank in 2023, aligning its regulations with the 2022 apostolic constitution. While the new statute makes minor adjustments, it leaves some significant issues unaddressed. Notably, it does not specify the supervisory framework for the IOR or the Supervisory and Financial Information Authority (ASIF), which oversees the IOR’s operations. This lack of clarity suggests that the IOR remains relatively independent within the broader Vatican finance reform.

Oversight and Auditing

Who Oversees the Vatican’s Financial Operations?
Oversight of Vatican finances is divided among various entities. The Secretariat for the Economy, headed by a cardinal, is responsible for financial matters. The Council for the Economy, composed of cardinals and lay experts, also supervises financial operations. External auditors, including PricewaterhouseCoopers, review the Vatican’s financial statements.

Are Vatican Finances Subject to Audits?
Yes, Vatican finances are subject to regular audits. External firms, such as PricewaterhouseCoopers, conduct financial audits to ensure compliance with financial regulations and standards, promoting transparency and accountability.

How Does the Vatican Fund Its Charitable Work?
The Vatican funds its charitable activities through various means. Donations, particularly through the Peter’s Pence collection, form a substantial part of the funding. Additionally, investment income and revenues generated by the Vatican’s commercial activities, such as its museums, contribute to supporting charitable initiatives.

Is the Vatican Tax-Exempt?
The Vatican enjoys tax-exempt status within its territory, but this status may not extend to individuals or entities associated with the Vatican, depending on local laws. In many countries, churches, including the Vatican, are exempt from paying taxes.

Institute for the Works of Religion (IOR)

The Institute for the Works of Religion (Italian: Istituto per le Opere di Religione; Latin: Institutum pro Operibus Religionis; abbreviated IOR), commonly known as the Vatican Bank, is a financial institution situated inside Vatican City and run by a Board of Superintendence, which reports to a Commission of Cardinals and the Pope. It is not a private bank, as there are no owners or shareholders; it has been established in the form of a juridical canonical foundation, pursuant to its statutes. Since July 9, 2014, its president is Jean-Baptiste de Franssu. The IOR is regulated by the Vatican’s financial supervisory body ASIF (Autorità di Supervisione e Informazione Finanziaria).