VATICAN CITY
The Stanly News and Press
July 11, 2014
Foreign Policy
Friday, July 11, 2014 — The Vatican Bank’s history reads more like Dan Brown than the financial pages, but its worst — and weirdest — days may be behind it. After a year of reorganization and reform that saw a 97 percent drop in profits, the Holy See installed a new set of overseers that includes a man who made his reputation closing down North Korea’s illicit bank accounts.
But what is the Vatican Bank and why do the Catholic Church and its 1.2 billion adherents need their own financial institution? Officially dubbed the Institute for Works of Religion (IOR) and founded in 1942, the bank’s history has been defined by scandal, secrecy and non-compliance with the West’s standard anti-fraud measures. In fact, calling the IOR a bank may be stretching the term. It doesn’t issue checkbooks or make loans, there are strict criteria and background checks for clients, and some of its clients-only ATMs have a Latin option.
In reality, the IOR acts more like a discrete “off-shore” institution for holding funds than it does a typical bank — in fact, in 2012 officials eschewed the “bank” title. Carlo Marroni of Il Sole 24 Ore, an Italian financial daily, has written that the bank mostly invests its nearly 8 billion euros in currency and bond markets — and lots and lots of gold. When the bank’s reported profit dropped by more than 80 million euros (about $109 million) from 2012 to 2013, 16.4 million of that reduction was “tied to writedowns and fluctuations in the value of the IOR’s gold reserves.”
Pope Francis has made reforming the bank one of his top priorities, and the bank is in now in full clean-up mode. When logging on to the IOR website, visitors are greeted with a message that reads like an admission of guilt and apology. “The IOR is engaged in a process of comprehensive reform, to foster the most rigorous professional and compliance standards,” the letter says. “We are conducting an extensive evaluation of all our clients’ accounts, with the aim of closing down those relationships that are not in line with the IOR’s mission.”
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