Vatican City , officially Vatican City State , is a landlocked sovereign city-state whose territory consists of a walled enclave within the city of Rome. It has an area of approximately 44 hectares (110 acres), and a population of around 840. This makes Vatican City the smallest internationally recognized independent state in the world by both area and population.
Vatican City is an ecclesiastical or sacerdotal-monarchical state, ruled by the Bishop of Rome—the Pope. The highest state functionaries are all Catholic clergymen of various national origins. It is the sovereign territory of the Holy See (Latin: Sancta Sedes) and the location of the Pope's official residence, referred to as the Apostolic Palace. The Popes have generally resided in the area that in 1929 became Vatican City since the return from Avignon in 1377, but have also at times resided in the Quirinal Palace in Rome and elsewhere.
The independent city-state was established in 1929 by the Lateran Treaty, signed by Cardinal Secretary of State Pietro Gasparri, on behalf of Pope Pius XI and by Prime Minister Benito Mussolini on behalf of King Victor Emmanuel III of Italy. The treaty spoke of it as a new creation, not as a vestige of the much larger Papal States (756–1870) that had previously encompassed much of central Italy. Vatican City is distinct from the Holy See,[note 5] which dates back to early Christianity and is the main episcopal see of 1.2 billion Latinand Eastern Catholic adherents around the globe.
In the city, there are cultural sites such as St. Peter's Basilica, the Sistine Chapel and the Vatican Museums. They feature some of the world's most famous paintings and sculptures. The unique economy of Vatican City is supported financially by the sale of postage stamps and tourist mementos, fees for admission to museums, and the sale of publications.
The Vatican City State budget includes the Vatican Museums and post office and is supported financially by the sale of stamps, coins, medals and tourist mementos; by fees for admission to museums; and by publications sales. The incomes and living standards of lay workers are comparable to those of counterparts who work in the city of Rome. Other industries include printing, the production of mosaics, and the manufacture of staff uniforms.
The Institute for Works of Religion, also known as the Vatican Bank, and with the acronym IOR (Istituto per le Opere di Religione), is a bank situated in the Vatican that conducts worldwide financial activities. It has an ATM with instructions in Latin, possibly the only such ATM in the world.
Vatican City issues its own coins. It has used the euro as its currency since 1 January 1999, owing to a special agreement with the European Union (council decision 1999/98/CE). Euro coins and notes were introduced in 1 January 2002—the Vatican does not issue euro banknotes. Issuance of euro-denominated coins is strictly limited by treaty, though somewhat more than usual is allowed in a year in which there is a change in the papacy. Because of their rarity, Vatican euro coins are highly sought by collectors. Until the adoption of the Euro, Vatican coinage and stamps were denominated in their own Vatican lira currency, which was on par with the Italian lira.
Vatican City State, which employs nearly 2,000 people, had a surplus of 6.7 million euros in 2007 but ran a deficit in 2008 of over 15 million euros.
In 2012, the U.S. State Department's International Narcotics Control Strategy Report listed Vatican City for the first time among the nations of concern for money-laundering, placing it in the middle category, which includes countries such as Ireland, but not among the most vulnerable countries, which include the United States itself, Germany, Italy and Russia.
On 24 February 2014 the Vatican announced it was establishing a secretariat for the economy which will be responsible for all economic, financial and administrative activities of the Holy See and the Vatican City State. Cardinal George Pell is to head up the secretariat, the formation of which follows the charging last month of two senior clerics including a monsignor with money laundering. Pope Francis also appointed an auditor-general authorized to do random audits of any agency at any time, and engaged a US financial services company to review the Vatican's 19,000 accounts to ensure compliance with international money laundering practices. The pontiff also ordered that the Administration of the Patrimony of the Apostolic See will become the Vatican's central bank, with responsibilities similar to other central banks around the world.