VATICAN CITY
Business Insider
STEPHANIE YANG
From running on donations to becoming an international holding company, the Catholic Church’s financial past is littered with secrets.
So much that author Gerald Posner wrote hundreds of pages chronicling the institution’s financial scandals in his new book, God’s Bankers.
A little history:
Years ago, the Vatican financed its operations with donations and indulgences, free passes for sins in exchange for money. In the early days, the Vatican made little effort to keep track of finances, which meant the institution was rife with extravagant spending and embezzlement.
After teetering on the edge of bankruptcy several times, the Vatican appointed Bernardino Nogara as its new financial advisor in 1929, who straightened out the church’s finances and grew a $92 million investment from Benito Mussolini into almost $1 billion.
World War II also played a huge role in the creation of the Vatican Bank, as well as the unique power it held. As the Allies imposed restrictions on bank accounts, it became harder to move money around. Nogara created the bank, called the Institute for Religious Works, in 1942 to avoid having financial transactions tracked through Western Banks. Because it resided in Vatican City, it was exempt from all wartime restrictions and became “the world’s best offshore bank.”
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