Why the ‘Vatican Bank’ doesn’t exist

Over the years, few Catholic outfits have generated intrigue quite like the “Vatican Bank.” Speculation about its inner workings has boomed again in recent days, with a series of leaked Vatican documents about purported shady transactions, claims of stonewalling of Italian inquests, and alleged loopholes in anti-money laundering laws.

The current issue of l’Espresso, Italy’s most widely read newsmagazine, captures the mood with an eye-catching cover story under the headline, “God’s Bank: Dossiers, Accusations, and Venom.”

Whatever one makes of those reports, there’s a slight problem with the premise: The “Vatican Bank,” as such, doesn’t actually exist.

To be sure, there is something inside Vatican walls called the “Institute for the Works of Religion” (often referred to by its Italian acronym, IOR). While it supports papal initiatives and the pope’s ambassadors in various nations, the IOR also takes deposits, makes investments, and moves money around the world, mostly on behalf of Catholic entities such as dioceses and religious orders.

According to the l’Espresso piece, the IOR has roughly 33,000 clients, most of them located in Europe, though some 3,000 are in Africa and South America. All told, the value of its holdings, known as its “patrimony,” is estimated at roughly $6.5 billion.

The IOR has been caught up in more than its share of scandals over the years, from the Banco Ambrosiano meltdown of the 1970s to Italy’s bribery scandals in the 1990s, and the latest newspaper reports suggest to some that not much has changed. Insiders, however, insist the bad old days are gone, that today the place is run by sophisticated lay professionals committed to playing by the rules.

That’s not just for the moral reasons laid out by Benedict XVI, they say, but also because compliance with secular benchmarks of transparency brings down transaction costs, and permits the IOR to compete on a level playing field with other financial institutions in Europe.

In light of the place’s history, outsiders may be forgiven some skepticism. To evaluate it accurately, however, requires a grasp of what the IOR really is. [more]

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NCR