Pope Francis has issued new statutes for the Vatican Institute for the Works of Religion (IOR), popularly known as the ‘Vatican Bank’, in a move the Vatican said “represents an important step in the process of adaptation to the highest international standards” in financial administration.
Driving the news
On Saturday the Vatican published new statutes for the IOR, a Vatican institution set up by Pope Pius XII in 1942 but with roots dating back to the nineteenth century.
According to its website, the IOR serves the global mission of the Catholic Church “through the administration of assets entrusted to it and through providing payment services to the Holy See and related entities, religious orders, other Catholic institutions, clergy, employees of the Holy See and accredited diplomatic bodies”.
The new IOR statutes – approved Saturday for a provisional two-year period – reaffirm that mission, defining the scope of the bank to that of providing for the custody and administration of real estate and other assets transferred or entrusted to the Institute and destined “for works of religion and charity”.
The principal change in the new IOR statutes is the introduction of the figure of an external auditor to replace the independent Vatican Financial Information Authority set up by Pope Benedict XVI in 2010.
In a special legal instrument known as a chirograph, Pope Francis further specified that that external audit apply to “all account books and documents”, without exception, thus putting an end to secret Vatican bank accounts.
The new statutes continue to provide for a council of five cardinals that will monitor “the loyalty of the institute to the statutory regulations in the manner prescribed by the statute”.
But the day-to-day “administration and management” of the bank, as well as the supervision and monitoring of its “financial, economic and operational activities”, will be left in the hands of a seven-member lay board (previously five-member) appointed by the council of cardinals.
The new statutes also put an end to possible conflicts of interest, specifying that employees of the Institute “may not engage in any other activity of an advisory nature, whether paid or unpaid, nor may they engage or participate in any commercial activity, in any capacity”.
For the record
In a commentary published on the official Vatican News website, Editorial Director for the Vatican Dicastery for Communication Andrea Tornielli said Pope Francis is renewing the IOR “through greater attention to ethics, staff, time management, and the appointment of an external auditor”.
Tornielli said other “important signs” in Pope Francis’ move included “greater emphasis on the peculiarity of the IOR, its being subject to canonical norms, and its being framed within the renewed Vatican legislative context… with regard to matters of financial transactions, transparency, and anti-money laundering”.
Pope Francis’ reform of the IOR means “a renewed fidelity to the original mission” of the Institute, added Tornielli.
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Why it matters
The cleaning-up of Vatican finances has been one of Pope Francis’ top priorities ever since he came to the papacy in 2013.
In June of that year, the Pope flagged his intention to reform the IOR, but due to debates over proposed changes the bank statutes were never revised.
In 2014 Francis also established a Secretariat and Council for the Economy to set financial policy guidelines and to oversee Vatican economic affairs.
As Vatican News reports, in 2018 the IOR recorded a profit of 17.5 million euros, down from 31.9 million euros in 2017.
In June this year, the IOR reaffirmed its commitment to “selecting financial assets in which to make investments consistent with Catholic ethics, exclusively selecting companies that carry out activities that are compliant with the Social Doctrine of the Catholic Church”.