Washington, D.C. Newsroom, Jul 10, 2020 / 04:00 pm (CNA).- The Holy See is facing a perfect storm of a massive income shortfall, months of financial scandal, and a looming international banking inspection. As it prepares to weather the second half of 2020, a range of measures have been taken to shore up its finances and reputation. But will they be enough, or could they end up making matters even more complicated?
According to an apparently leaked internal memo published on Monday, all curial departments of the Vatican have been asked to move all their cash deposits to the Holy See’s central bank. The move signals the depths of the current liquidity crisis facing the Vatican, and raises a number of questions about its ability to mitigate it.
On July 7, Vatican journalist Marco Tosatti published the text of a letter supposedly sent to the heads of all curial dicasteries on May 8. Fr. Juan A. Guerrero, S.J., prefect of the Secretariat for the Economy, said in the letter that the decision was taken after a May 4 meeting, led by Pope Francis, to respond to “this particularly negative economic juncture.”
According to the text of the letter, every Vatican department has been asked to move all their external cash deposits to APSA, which functions as the Holy See treasury, sovereign wealth manager, and administers payroll and operating expenses for Vatican City.
CNA asked the Holy See to confirm or comment on the leaked letter but received no response.
The instruction to move all curial funds to APSA is a dramatic step, exceeding previous attempts at financial centralization under Guerrero’s predecessor, Cardinal George Pell. It points to an acute cash crunch for the Holy See, and raises the possibility that it may already be struggling to meet daily operating expenses, including payroll.
In May, Guerrero said that in the wake of the coronavirus pandemic, the Vatican is forecasting a reduction in income between 30%-80% for the next fiscal year. While dismissing suggestions that this could lead to a default by the Holy See, Guerrero did say “that doesn’t mean that we are not naming the crisis for what it is. We’re certainly facing difficult years.”
Despite the loss of income, some Vatican departments maintain large investment and asset portfolios, most notably the Secretariat of State and the Congregation for the Evangelization of Peoples (Propaganda Fide).
But while moving all cash reserves and deposits held at external banks to APSA could provide a short-term liquidity bridge for the Holy See, it could also create fresh regulatory headaches for the Vatican, and will likely be difficult to achieve.
As CNA has previously reported, the Secretariat of State has maintained large cash balances with several external banks, including in Switzerland. However, transferring the balance of those funds could prove a far from straightforward process.
As reported previously, secretariat funds on deposit were used as security against a $200 million line of credit extended by two banks, Credit Suisse and BSI. The loaned funds were used, in part, to fund the secretariat’s controversial investment in a London building at 60 Sloane Avenue, which has led to the suspension of several curia officials and the arrest of Italian businessman Gianluigi Torzi.
In recent months, Swiss financial authorities have confirmed that several bank accounts, with balances totalling tens of millions of euros, have been frozen as part of an ongoing investigation into the London deal, led by Vatican prosecutors, making them likely hard to transfer.
It is also not clear if the arrangement of using cash deposits as collateral to secure loans to fund investments remains an ongoing practice for the secretariat with other banks. If it does, transferring those deposits to APSA could trigger the banks to call in their loans, adding a credit crunch to a cash shortage for the Vatican.
The text of the leaked letter from Guerrero appears to acknowledge some potential difficulties for different curial departments in complying with his “request,” noting that “where it is necessary to maintain a deposit with IOR or other banks for operational needs, I am kindly asking you to communicate this to this Secretariat [for the Economy] as soon as possible.”
Even if the Secretariat for the Economy is able to have all curial cash moved to APSA without serious financial penalties or complications, and even if this is sufficient to provide for the Holy See’s short-term liquidity needs, the move could still create other unexpected difficulties for the Vatican.
In September, Moneyval, the Council of Europe’s anti-money laundering watchdog, is set to conduct a two-week onsite inspection of the Holy See and Vatican City – the first since 2012.
The president of the Vatican’s Financial Information Authority, Carmelo Barbagallo has described the inspection as “especially important.” “Its outcome may determine how the jurisdiction [of the Vatican] is perceived by the financial community,” he said on July 3.
Moneyval is expected to arrive with its own list of concerns and questions following months of reporting on Vatican financial scandals. A key item on its agenda is likely to be the role of APSA.
Following the last onsite inspection in 2012, APSA agreed to stop providing services to individuals or taking part in commercial transactions, with these functions being transferred to the Institute for Religious Works (IOR), often referred to as the Vatican Bank, which maintains accounts for Vatican employees, individuals and religious groups. APSA was to be limited to administering the sovereign assets of the Holy See, meeting payroll and operational costs, and functioning as the national reserve bank of the Vatican.
In exchange for agreeing to step back from commercial activity, APSA was exempted from annual inspections by the Vatican’s Financial Intelligence Authority (AIF), whose efforts are in turn assessed by Moneyval.
In 2014, Pope Francis issued new norms, transferring oversight and control of APSA’s remaining investment functions to the Prefecture for the Economy, then headed by Cardinal George Pell.
The AIF’s 2015 annual report concluded that since it is no longer an “entity that carries out financial activities on a professional basis,” “APSA stopped being a part of AIF’s jurisdiction at the end of 2015.”
The 2015 AIF report which exempted APSA from further scrutiny said that “If APSA were to carry out financial activities on a professional basis, it would fall again under the jurisdiction of AIF which… must publish and update the list of subjects who must comply with the requirements set forth in [relevant law].”
But last year, Bishop Nunzio Galantino, head of APSA, acknowledged that it had loaned 50 million euros to finance the purchase of an Italian hospital, the Istituto Dermopatico dell’Immacolata (IDI), in 2015, even though APSA is prohibited from making loans that finance commercial transactions.
APSA was forced to write off 30 million of the 50 million euro loan, wiping out APSA’s profits for the 2018 financial year.
The acknowledgement by Galantino that APSA was in 2015 engaged in prohibited lending activity will likely have attracted the attention of European financial watchdogs, who will want to discuss it in September.
In 2016, Pope Francis partially reversed some of the 2014 reforms, returning control of its investment activity to APSA from the Prefecture for the Economy.
That APSA is engaged in financial activity that requires oversight was underlined when, in June this year, Pope Francis moved the office of the Vatican’s financial records database from APSA back under the management of the Secretariat for the Economy — a move explicitly made to emphasise the need for external oversight.
When Moneyval arrive in September, they are likely to push for a renewed look at the role of APSA and its exemption from AIF and Moneyval’s vigilance – all the more so if it becomes the home for all curial assets.
Some Vatican departments, most notably the Secretariat of State, remain engaged in commercial investments as part of their ongoing financial activities. If, as Guerrero’s May 8 letter indicates, all, or even most, liquid curial assets are now being banked with APSA, it will raise serious questions about how those commercial ventures are being maintained, and if APSA can still credibly claim to play no part in commercial activity.
2020 has become an incredibly high-stakes year for the Vatican, on the line is its ability to continue daily operations and remain a respectable member of the financial community.
Returning to financial health and international credibility are, in many ways, tied together for the Vatican. But after years of regulatory chaos and dubious financial conduct, it remains to be seen if 2020 is a crisis year that makes those efforts come good at last – or finally breaks the bank.
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Back when I was a kid, I knew the Church was partly to blame for overpopulation because they forbad birth control. And I eventually came to understand that the Christian prohibition of sex-before-marriage was really all about preventing illegitimate children. Now that we have contraceptives, the prohibition is out-dated.
Don’t get me started on abortion.
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Thank goodness for Scott and Kimberly Hahn, Janet Smith, the Kippley’s/CCL, and Father Anthony Zimmerman.
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Is it too much to ask the hierarchy to believe (and actively defend) what the Church taught to the above folks, who taught me?
WHAT are you talking about!! Christ said that out of wedlock sex was sin before there was a Church. This issue in nonnegotiable.
Exactly
The prohibition on sex before marriage has everything to do about immorality and abuse of God’s gifts and NOTHING to do with illegitimacy. And having birth control available has nothing to do with it. Sex with a person not your marriage partner is forbidden. Period.Scott and Kimberly Hahn are faithful converts to Catholicism . Their book Rome Sweet Home goes into some detail about their understanding of the Catholic concept of birth control. In short they dropped their Protestant belief of pro-contraception and accepted Catholic belief. I dont have any idea what you are referncing about them.
I think you are perhaps a bit caught up in the first paragraph and did not well read the second two:
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“Thank goodness for Scott and Kimberly Hahn, Janet Smith, the Kippley’s/CCL, and Father Anthony Zimmerman.
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Is it too much to ask the hierarchy to believe (and actively defend) what the Church taught to the above folks, who taught me?”
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There was a time the Church hierarchy defended the Church’s “family life teachings.” The Hahns, Kipple’s, Smith, Zimmerman (and others) learned them, and were able to effectively transmit and convert others–including me.
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Very sad the hierarchy doesn’t seem much interested in converting folks these days.
Surely, “not identical.” Not even consistent. But, how to contain the manifest contradictions (!), but without being lured into triggering a replay of the Reformation dismemberment?
“'[S]ynodality is…a spiritual event. That is, [the pope] invites us to listen to one another and, in listening to one another, to listen to the Holy Spirit for what he wants to say to us,’” Koch explained.”
Such listening today entails, as well, listening to all that the Holy Spirit has said to us in the past. Yes? The Magisterium. So, the contradictions are not only about deconstruction of the Church “structure,” but also about the revealed unity of faith and morals (Veritatis Splendor, nn. 95, 115). And, moreover, the elementary, pre-theological and non-demonstrable first principle of non-contradiction.
The fly in the ointment (so to speak) is the strategic positioning rainbow exhibitionism by Cardinal Marx on the C-7 and Archbishop Hollerich as relator-general for the 2023 Synod on Synodality. Both already enlisting the media to help double-speak the contradictions (in the path of Hans Kung et al who earlier worked derail the real Vatican II–the actual documents–with the virtual spirit of Vatican II).
But, now, as for the German synodal wayward, perhaps the pope’s recent and very excellent remarks about “idols” serve especially, and yet obliquely, for whatever is left of the Church in Germany… https://cruxnow.com/vatican/2022/04/pope-urges-priests-to-avoid-idols-that-distract-from-god
You mean the Sin-nod on Sin-nod-ality, don’t you?
Indeed, and I humbly suspect that yours truly introduced that term back in May 6, 2021, as part of a comment that bears repeating today:
“On the ‘path’ with Alice in Wonderland: ‘Would you tell me, please, which way I ought to go from here?’ The Cheshire Cat: ‘That depends a good deal on where you want to get to.’ Alice: ‘I don’t much care where.’ The Cheshire Cat: ‘Then it doesn’t much matter which way you go.’
Or, as Martin Luther once said of the Bible, now with Bishop Batzing’s double-speak: ‘a synod has a wax nose; you can twist it whichever way you want!’
synod = sin nod.”
Kathryn above : Your first paragraph was confusing. I had to read the entirety of your comments several times in order to understand (I think) what you were getting at.
While I once a supporter of contraception/abortion, I am now vehemently opposed to those things–thanks to laymen (Father Zimmerman was a priest, obviously) like the Hahns, etc.
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I can count on one had the priests I know who uphold the truth on contraception publically (none of them in my own diocese).
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For nearly twenty years, I sat through homily after homily on social-justice- poor=good people, rich=bad people, and judging is a bad thing to do (very un-Christ like to call someone out on his sin).
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The homily I once heard that mentioned divorce promoted annullments. I think I heard a sermon on contraception only twice–once at a Rosary Triduum, and once at an NFP conference (so not the Sunday Mass).
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Since family breakdown is a large component of poverty and social ills (and Church decline), I don’t think it is much too ask for the hierarchy of the Church to actually promote those behaviors that protect against those very ills, especially since the hierarchy never misses a chance to support increased taxes and gov’t funding on services to support the poor trapped in the unhealthy social situations to lead to the poverty to begin with.
I’ve noticed the obsession with governmental solutions by many Catholic Social Teaching advocates. The problem with this approach is the amount of unelected, unaccountable power that this concentrates in the hands of government bureaucracies. This lack of checks and balances is an open invitation to the corruption of those wielding this power. Too little recognition of the effects of Original Sin that are still with us. It’s getting to the point that the government is being treated like an all knowing, all seeing, and all powerful god. No recognition of human weaknesses and limitations.
I write to wonder why so many “Catholic “ websites don’t want any comments from average people. I used to sometimes comment at America but the Jesuits cut me off from commenting because I didn’t take the radical progressive line. This site is the only Catholic site I’ve found that lets average people speak their mind.
Why are so many “Catholic” sites so fearful of hearing from people who aren’t “progressives?”
Perhaps you have answered your own question, that many progressives are deaf, and rigidly in a rut BECAUSE they’re progressive…
But the same is true of many “conservatives,” that many are rigid foot-draggers—but of a different color (and surely not lavender!). My very solid pastor of long ago sometimes barked that he was “orthodox”, not conservative. These two types of rigid bigotry (two, not only conservatives!) are allergic to each other, and the itchy scratching dominates the media run mostly by progressives. It’s all about subscriptions.
Meanwhile, a real conservative and a real progressive (probably the former more than the latter?) would be reassured by St. John Henry Cardinal Newman’s Sermon VI for the 6th Sunday of Lent, which concludes:
“God grant that we may not attempt to deceive our consciences, and to reconcile together, by some artifice or other, the service of this world and of God! God grant that we may not pervert and dilute His holy Word, put upon it the false interpretations of men, reason ourselves out of its strictness, and reduce religion to an ordinary common-place matter–instead of thinking it what it IS, a mysterious and supernatural subject, as distinct from anything that lies on the surface of this world, as day is from night and heaven from earth!”
As for Jesuits, I have personally known three (three!) who were also unambiguously Catholic, partly because none worked in the media, none confused matters of prudential judgment with dogma, none still read much what has become of America magazine, and certainly none sipped at the tainted waters of the National Catholic Report (a self-banished “commentator” on things Catholic, but no longer recognized as a Catholic publication).
It’s quite simple, sadly enough. Those sites are focused on pushing a specific narrative in order to advance a left wing political and social agenda. Dissenting voices expose and challenge those false narratives, so they need to be silenced.
Bill, I would say you are correct to characterize America as “Catholic.”
Because I certainly wouldn’t call it Catholic.
Sending all at CWR, Easter Greeting.
I think Kathryn has a good tack. Her direction and concerns can be understood as charted through VATICAN II and Paul VI.
Please consider this word “tack”, in its varied senses.
The thing complained of has 2 external parts, what is preached and what is not preached; and the ones who are on the receiving end, are put into different kinds of apposition. If you have to go head-on against it -the preaching, say,- those in charge then want to be very gracious and can insist how accommodating everyone needs to be.
Also, the preaching on the 2 sides, is said to be “spiritual”. Consider: If you take it as an assignment to reflect in silence on what is offered and so “come to allow yourself to grow in wisdom quietly and humbly”, because, as some hold, “it is the way of Therese of Lisieux”, then, what borderland area would it be that you have entered into there?
Cardinal Koch had an interview with Vatican Radio January 17 2014 and it was reported in CWR a few days later -in the link. I have read CNA’s report here April 2022 and CWR’s report there January 2014. With both I am unable to decide what Cardinal Koch is leading, other than “seamless garment unity” of 2014 possibly being carried along through “dialogue” of 2022.
In the whole 8-year span, his propositions and arrangements are almost identical in opacity and if he were a prism the light would not refract! I apologize for this frankness. And if I try to apply Cardinal Newman’s exhortation, above, quoted by Peter D. Beaulieu, I find I don’t know how. Good thing because I likely would make a total mess of it for Newman, the way things are positioned.
Jesus’ tunic was never torn. The ones who were interested in it cast dice for it!
If you want to make allegory from Scripture, please try to be true to the scripts.
But I also would take Peter D. Beaulieu to task here. The touchstone on everything is surely NOT the state of the NC REPORTER nor the “3 Jesuits” known by Beaulieu!
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‘ Most people have a plane-like vision, stuck to the earth, of two dimensions. When you live a supernatural life, God will give you the third dimension: height, and with it, perspective, weight and volume. ‘
Escriva, THE WAY 279
https://www.escrivaworks.org/book/the_way/point/279
https://www.catholicworldreport.com/2014/01/20/cardinal-koch-putting-christs-seamless-garment-back-together-interview-about-church-unity/
Kathryn above – Most people don’t see the link from abortion back to contraception. Persuading them of it is a very high hill to climb these days and I think that’s why most priests and bishops steer clear of the subject (and that is making the very unsure assumption that they are convinced themselves). So, yes, I agree that lay leaders like Janet E. Smith and the Hahns are courageous and prophetic. I’m not familiar with the Kippleys/CCL.
Instead of advancing a single link from “abortion back to contraception,” is there a THREAD…
…running from contraception through abortion, to open marriages, to cohabitation and a divorce culture, to a non-binary/homosexual subculture and gay “marriage,” and then to polygamy beginning already with acquiescence to Islamic practices across many parts of Europe (in France, between 150,000 to 400,000 residents in polygamous households (Philip Jenkins, “God’s Continent, 2007), to Western open-range gender theory and transgenderism?
In 1948 the defeated minority at the Anglican communion Lambeth Conference (earlier approving contraception) told it like this:
“It is, to say the least, suspicious that the age in which contraception has won its way is not one which has been conspicuously successful in managing its sexual life. Is it possible that, by claiming the right to manipulate his physical processes in this manner, man may, without knowing it, be stepping over the boundary between the world of Christian marriage and what one might call the world of APHRODITE, the world of sterile eroticism?” (Cited in Wright, “Reflections on the Third Anniversary of a Controverted Encyclical,” St. Louis: Central Bureau Press, 1971).
Pope Paul VI enlarged the warning, in his Humanae Vitae (Of Human Life, 1968), on the future of a morally unhinged world, the contraceptive mentality — and STATE POWER.
Dismissed at the time as an alarmist, he asked,
“Who will stop rulers from favoring, from even imposing upon their peoples, if they were to consider it necessary, the method of contraception which they judge to be most efficacious?” Today, from the Administrative State, in kindergartens a balanced diet soon of FDA-approved sugar-free cookies together with gender/transgender theory ideology.
Neither a single link nor a thread, but instead the real “seamless garment.” The hour is late…
Thank you Peter D. Beaulieu for deepening your thought here.
As for Cardinal Koch, I still am “not getting it”. Sorry. It could be one of my gears is stuck or something so. The EWTN interview is said to be scheduled for airing April 24 2022; but the article did not say which EWTN program will carry it or what time; and I can’t find it on the EWTN Schedule for that day.
For now, I just don’t get it -:
‘ “I don’t see these as identical. For the pope, synodality is … a spiritual event. That is, he invites us to listen to one another and, in listening to one another, to listen to the Holy Spirit for what he wants to say to us,” Koch explained.
“In Germany, I have the impression that synodality consists in dealing with the structures, something that Pope Francis already urged very energetically in his “Letter to the People of God” in Germany, that it is first and foremost not about structures but spirituality. And secondly, that the synodality on the whole should serve evangelization, as the pope has now also established in the Apostolic Constitution for the Roman Curia.” ‘
John and Sheila Kippley were the founders of the Couple to Couple League. They went on to found another NFP organization called NFP and More.
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Contraception is “intrinsically disordered” by itself–it’s link to abortion, while not irrelevant, is not the reason the it is forbidden. And I agree, I think it is a “very unsure assumption” the hierarchy is convinced of it.
Ever warning given in early 1960 by originally Pope John 23 about what the contraceptive pill would do to marriage, to women, to men has come to fruition. Breakups, unfaithfulness, sex from young ages. abuse of women, poor self esteem for women who have become sex slaves, not liberated,
sexual deviations, males becoming the clowns to perform with women dominating. The list goes on and on and everyone is so unhappy, and cannot find any beauty in the gifts God has created. I have been teaching the Billings Ovulation Method since 1970 and have watched the rot set in with no support from our pulpits. Yes Janet Smith has spoken at our conferences together with many wonderful people, including Drs John and Lyn Billings, who dedicated their entire lives to God’s plan for marriage.
Ever since the Bismarck Kulturkampf «Germany» has been trying to domesticate the Catholic Church. Not satisfied with the various schisms and trends of the «Lutheran» and «Calvinist» variety the so called Old Catholics were encouraged in their anti-romanist trajectory.
All of these schismatics are struggling against the processes of secularism, indifferentism and a general European/Western cultural decline.
These neo «German Catholics» plainly do not read history, or arrogantly assume history never repeats.
Islam, biding its time off stage, certainly does. The slow capture of the once Christian Levant and Near East is tangible proof of that.
A divided house will ineluctably collapse.