Vatican takes a stab at banking purity
(The author is a Reuters Breakingviews columnist. The opinions expressed are his own.)
By Edward Hadas
The Vatican‚Äôs bank easily became a scandalous financial institution of world renown. Pope Francis is betting it will not be too hard for the Institute for the Works of Religion (known as the IOR, after its Italian initials) to transmogrify into a model of probity.
The IOR dates back to 1887, making it a fairly early player in the first era of financial globalisation. The Catholic Church, the original multinational, was an eager participant in that movement. Poor lands received both priests and money from rich countries, and a good bank could watch over the funds. At the time, relations with Italy were cold, so the Vatican went its own way.
Over the years, the IOR served Catholic purposes reasonably well, but it also attracted many less savoury customers, who took advantage of the ability to move money through the ill-supervised Vatican city-state. The bank‚Äôs scandals are not yet done: Monsignor Nunzio Scarano, a Vatican accountant, is now awaiting trial for smuggling 20 million euros into Italy via IOR.
The Pope could have closed the tiny IOR. A new home in one of the world’s globally networked universal banks would easily have been found for the church’s 19,000 accounts, ditto jobs for its 114 employees. Costs might well have been saved. Instead, Francis decided to accept an expert commission‚Äôs recommendation to prune and purify. He gave no reasons, but closure could have been interpreted as an admission that the Catholic Church is so ethically feeble that it cannot find enough good people to run an honest bank.
Actually, the IOR is well on the way to becoming an exemplar of international banking virtue. An outside firm is winnowing the account list and a new, international supervisory structure has been set up. Transparency is the watchword.
For Christians, God and Mammon always make uneasy partners, but Catholics have a long tradition of creating explicitly religious financial institutions. In the Middle Ages, the Monti di Pieta pioneered lending to the poor at low interest rates. In its reforms, the IOR is a latecomer following a secular trend. Still, it could yet embellish the
- Pope Francis has approved a reform proposal keeping the Vatican bank, known as the Institute for the Works of Religion (IOR), open. The bank’s purpose is to manage funds for Roman Catholic orders of priests and nuns, charitable institutions and Vatican employees and retirees. “The IOR will continue to serve with prudence and provide specialised financial services to the Catholic Church worldwide,” the Vatican said on April 7.
- Vatican press release
- Reuters: Pope rules Vatican bank to stay operative, approves reforms (read the¬†full stoy here)