THE Vatican has said it is keeping its options open on whether to link its tiny economy to the euro, Europe's planned single currency.
"We have to study this more in depth," Cardinal Edmund Szoka told a news conference where he announced a Vatican budget surplus for the fourth straight year after 23 years in the red.
"For many years the currency of the Vatican has been the Italian lira," said Cardinal Szoka, the American president of the watchdog Prefecture for Economic Affairs.
"When the change comes, if Italy enters (the single currency), naturally the Holy See, must necessarily be prepared for a change, he said. "We are studying the situation."
The Italian lira is legal tender in the tiny 108 acre city state where the Pope rules as a sovereign monarch.
The use of the lira in the Vatican is regulated by a 1929 concordal which granted the Holy See its current status as a sovereign citystate.
Monsignor Francesco Saverio Salerno the prefecture's secretary, said the Vatican could either adopt the euro as a "satellite member of Italy" in the single currency, planned for introduction in 1999, or directly with the European Union.
Italy is hoping to be among the currency's founder members. But Monsignor Salerno said once the lira no longer existed, the part of the 1929 treaty with Rome regarding the use of the Italian currency would expire, making the Vatican a free agent.
"The Vatican, as a sovereign state, could technically do what it wants," Monsignor Salerno said. "It could even start up its own currency with its own value if it wanted or link it to another (noneuro) currency."
The Vatican's liradenominated budget is a fraction of that of many towns and corporations and even smaller that some individual Catholic dioceses around the world.
At the news conference Cardinal Szoka said the Holy See's consolidated budget for 1996 showed a surplus of $260,000 after income of about $194.57 million and expenses of about $194.31 million. "This gain is very small, only a tiny fraction of one per cent of the total costs," he said.
"This underlines the necessity of the continuing need to monitor our expenses very carefully and to continue our efforts to improve our income," he said.
Although it was in the black, the 1996 surplus was down from the consolidated 1995 surplus of $1.7 million.
The 23 years of deficits, which ended in 1993 with the first surplus, forced Pope John Paul to divert funds that had been earmarked for charities to take up the slack.
The Holy See's budget covers the Catholic Church's central administration and its diplomatic missions as well as Vatican Radio, the newspaper L'Osservatore Romano and the Vatican's printing and publishing houses.
Much of the Holy See's income derives from investments - mostly bonds - rent from real estate holdings, and contributions from the faithful around the world.
The Vatican budget does not include the Vatican Bank, which was touched by scandal in the early 1980s because of its relationship to the failed Banco Ambrosiano of Italy.
