The Vatican Bank
The Vatican Bank is also known as the Institute for the Works of Religion. This is a private institute which is located within Vatican City and it is run by an advisory board who gives report directly to the pope and a committee of cardinals. The Vatican Bank was established in June 1942 by Pope Pius XII. All the assets of the bank are not considered to be the direct property of the Holy See nor is it overseen by the Prefecture for the Economic Affairs of the Holy See. The main function of the Vatican Bank is to provide the safekeeping and administration of fixed and non-fixed property entrusted to it by the different people and intended for religious or charity works. Therefore the Vatican Bank is not a department of the Roman Curia nor is it one of the departments of the central administrative structure of the Roman Catholic Church.
The Vatican Bank is different from many other ordinary banks. The bank does not lend money, and it does not make direct investments. The bank receives money as deposits and then invests it in government bonds, some corporate bonds and in the inter-banking market where it deposit with other banks for a slightly higher interest rate than it receives. The bank contributes 55 million euros to the Vatican budget, making it one of its most crucial economic pillars
It is not the responsibility of the Vatican Bank to oversee the monetary policy of the Vatican City nor to control the money supply and maintain stability of a currency. However, the bank is a prosperous and money-making institute although its entire surplus is used for religious and charitable purposes.
Unfortunately, the Vatican Bank has been linked with several controversies regarding its investments, the appointments of its managers and its use of funds. This has led to several scandals within the institute with different people being invested and others forced to leave their positions in the bank. Most of the scandals involved illegal transaction of money from the bank’s accounts and improper investments and use of money. For instance in May 2012, Ettore Gotti Tedeschi was expelled from his chairman position of the Vatican Bank due to failure to fulfill the primary functions of his office. He is still being investigated on suspicion of money laundering. These allegations were harmful and took a toll on the reputation of the Vatican Bank.
The current head of the Vatican Bank is Ernst von Freyberg who was recently appointed to the position and has promised to ensure transparency within the institute and win back the trust of people. He was appointed to the position in February 2013 by Pope Benedict XVI just before his resignation. Ernst von Freyberg is the first non-Italian to be the president of the Vatican Bank.