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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What? More?
Too much of an echo chamber for the illuminati? Three comments and a question:
FIRST, the synodal style, by itself, is something for the next conclave to think about, twice. In 2028 Cardinal Grech might even be awarded two minutes to say his piece. One key innovation, here, is “consensus,” and we ask, “consensus about what”? A second devolution is the meaning of the word “alongside.” As successors of the Apostles (apostello: “sent”), the ordained bishops are firstly the guardians of the Deposit of Faith, which is our institutional, charismatic, sacramental, and personal incorporation into the life of Jesus Christ (the Mystical Body of Christ).
SECOND, yes, to some credible process to get the ordained clergy and the laity to support and leaven each other within the “universal call to holiness.” But, what still of Vatican II—which Grech mentions—which retains clarity about the vital “difference in kind as well as degree” (Lumen Gentium). Also a distinction between the realm of Revelation (Dei Verbum) and the realm of the world (Gaudium et Spes).
THIRD, so, in the full text of this initiative (https://www.vaticannews.va/en/vatican-city/news/2025-03/grech-a-new-path-to-help-the-church-walk-in-a-synodal-style.html), why are the terms “Synod” (of Bishops) and “Assembly” used interchangeably? In a deeper way, the presence of the entire Communion of Saints (!) already happens at each celebration of the Mass—as an “extension and continuation” (St. John Paul II, drawing from St. John Chrysostom) of the one event of Calvary. The center of universal human history; not simply an episode within one narrative among many.
So, yes, to reinvigorating a religious and therefore fully human alternative to a post-World War II, post-modern, and flat-earth world moving backward into global spheres of influence. But, alone, the synodal “style” does not replace content. This by procedurally substituting (?) the vertical altar with horizontal roundtables of various sizes.
QUESTION: What does the synodal “style” have to offer to what is, in fact, a new Apostolic Age?
By then we will have a different Pope and this “Synodality” nonsense would have been tossed into the trash can of history and forgotten, where it belongs.
Put not your trust in princes, in a son of man, in whom there is no help. When his breath departs he returns to his earth; on that very day his plans perish.
If not before. Most sons of men have their plans perish long before they die. If the plans happen to persist after the death of the planner, it is only because someone else made it his plan. (John Kennedy had less to do with the moon landing than he is usually credited.)
The question, then, is whether the new pope will take up Francis’s plans. That, of course, is completely unknowable. Many people point to the number of cardinals Francis has appointed, but ALL of the cardinals who elected Francis had been appointed either by Benedict XVI or by John Paul II. As we see, this did not guarantee the election of a like-minded pope. Even so, it is by no means certain that the next pope will change even the most obviously disastrous aspects of Francis’s papacy.
Team Francis, Cdls Grech, Hollerich, Cupich, Farrell, Roche, Tobin, how can we neglect McElroy are pressing forward despite hopeful expectations of the more traditional Catholic. 2028. The Synodal Church sails on regardless of passenger recalcitrance, disenchantment and turmoil.
Where does she sail? Paradise Island. A dreamy place where the brutality of rigorist legalism doesn’t exist. Where good is evil and evil is good. Didn’t Zoroaster foretell the day? A truly happy place in the minds of the enlightened progressives freed from tradition. That insufferable past.
Perchance Leviathan [wasn’t the bronze serpent an effigy?] himself will providentially wreck her, the survivors a new beginning.
“The brutality of legalism doesn’t exist …” except if we need it to enforce the synodal dance. After all, as Cardinal Grech reminded us, this is an expression of “the ordinary Magisterium.” And if a cleric said it, it must be true. Expect this process to be somewhat like the Vatican’s survey last summer: we want to “hear” you until what you start to say is not what we want to hear.
So when are we supposed to stop Synodaling and share the Word of God with someone else?
“Putting away falsehood, let every one speak the truth with his neighbor, for we are members one of another.”
(Ephesians 4:25)
Idiots.
O Lord, when will this affliction of walking talking and ending up actually doing and producing NOTHING will end!!!!!!
The church is being manipulated from the top.
I’m hoping that by 2028 the Synod on Synodality will be a vague memory that only about two or three Catholics will remember with embarrassment, if he or she is unfortunate to remember it at all.
Malice in Wonderland
Hilarious!!!
And perfect..,
How best to manage the worldwide Church? Circular roundtables of layered synodality (local, national, continental)?
Two comments and a question:
FIRST, a thought experiment…what if in 2025 we are tutored by the inner circle that the Council of Nicaea (1700th anniversary) was really in management of inclusion, rather than a recalling of what was/is believed from the beginning and, therefore, a rejection (non-inclusion!) of Arianism (read Pachamama, Fiducia Supplicans, etc.)? AND, then in 2026 or so, we read that the protocol for electing a subsequent pope is modernized to involve, in some way, the advice or even consent of the 2028 Assembly.
SECOND, about management of such a community-based (or Lutheran) remodel of the ecclesial Catholic Church of the Apostolic Succession (with a validly ordained priesthood and stuff like that), clearly rooted in Matthew (28:19) and in Pentecost (Acts 2:1-31)—“listening” to Benedict XVI we hear that the message is not to “turn back”, but rather “to return to the authentic texts of the original Vatican II” (The Ratzinger Report, 1985):
“But the Church of Christ is not a party, not an association, not a club. Not setting the clock back, but setting in right. Her deep and permanent structure is not democratic but sacramental, consequently hierarchical” (49). “Real reform is to strive to let what is ours disappear as much as possible so what belongs to Christ may become more visible…what the Church needs in order to respond to the needs of man in every age is holiness, not management” (53).
QUESTION: Does the replacement of Synods of Bishops with mongrel-democratic Synodality teach/imply/ signal and morph that the process of management IS holiness?
What, exactly, about the post-synodal Study Group #9 possibly anguishing over how to elevate today’s theologians and maybe an Assembly above the Church’s magisterium(?)—that is, assigned to develop “Theological criteria [?] and synodal methodologies [?] for shared discernment of controversial doctrinal [?], pastoral [?], and ethical [?] issues.”
My walk toward Christ is full of failures. My desire has been to follow him, but I fall short of that on a daily basis. I take the responsibility of sharing the message of the Good News with my neighbors seriously. I firmly believe that the role of the Church is to be the bridge between Good and all of humanity. The Church is supposed to serve as community to unite believers as one body in Christ. She is the beacon that clearly, without hesitation and full of clarity, announces the teachings of Christ to the world.
Anything, any movement, any teaching that attempts to move the Church from her purpose is heretical and must be cast out. In my weakness, I strive to walk in truth. I am not in a position, and I am unworthy to condemn another, but I know Jesus Christ and choose to walk with him. I ignore everything else.
Amen brother! You’re for sure on the right road.
YADA YADA YADA!!
BLAH BLAH BLAH!!
FURTHERMORE – asxovvnddiuertn434&&9999v330fgjv..!!
AND THIS TIME – I MEAN IT!!!
LOL, I can’t help but agree
Sounds like you’re all ready for the Jubilee of Synodal Teams!
The Synod was a “meeting about meeting” we were told. I guess the post-Synodal Synod will be a meeting about meeting about meeting. Just think of it this way: it’s the Vatican’s version of Festivus.
Serious question. Has a single parish made a single change because of the Synod?
Ours has not, not that I can tell
“The goal is not to add work upon work but to help Churches walk in the Synodal style” according to Cardinal Grech.
Help Churches walk in the synodal style. Hmm… that sounds eerily like “I’m from the Federal Government and I’m here to help.” More to the point, the 2028 Synod will be where the teeth come out to “help Churches walk in the Synodal style.” Well, that could prove problematic for Churches faithful to Tradition that exhibit bureaucratic resistance to walking in the Synodal style.
It is my prayer that Mssrs. Johann du Toit and Ken T are correct in their prediction that post-Francis, synodalism will be discarded. I am not so optimistic. I fear that 2028 will be the beginning of the final crackdown. The Church of Accompaniment directing us to accompany together into the cattle car taking us to banquet of rotten fruit compliments of the Synodal Way.