The Journal: The Financial Mess Facing the Vatican

Hosted by Ryan Knutson and Jessica Mendoza | Co-Produced by Spotify and The Wall Street Journal

Introduction: A Crisis Unveiled

In the episode titled "The Financial Mess Facing the Vatican," released on May 7, 2025, Jessica Mendoza and Drew Hinshaw delve into the intricate financial turmoil engulfing the Vatican City. The episode opens with a vivid portrayal of Pope Francis grappling with health issues, subtly hinting at the underlying financial stressors affecting the Holy See.

• Jessica Mendoza [00:05]: “It was winter at the Vatican, and Pope Francis was desperate. Francis sat in the reception room short of breath...”

This scene sets the stage for a deeper exploration of the Vatican's fiscal challenges, emphasizing the gravity of the situation even at the highest levels of the Catholic Church.

Historical Context: From Indulgences to Modern Deficits

The financial woes of the Vatican are not a recent phenomenon. Drew Hinshaw provides a historical backdrop, tracing the Vatican’s revenue sources from the medieval practice of indulgences to the control of the Papal States.

• Drew Hinshaw [05:04]: “...these indulgences, basically money to reduce punishment in the afterlife, kept cash flow until the practice ended in the 16th century.”

The dissolution of the Papal States in 1870 marked a significant turning point, stripping the Vatican of its territorial income and thrusting it into a precarious financial position. The establishment of the Vatican Bank in 1929 was an attempt to stabilize finances, but it soon became embroiled in scandals, tarnishing its reputation.

Modern Financial Crisis: An Asset-Rich, Cash-Poor Microstate

Despite possessing priceless art and historical artifacts, the Vatican faces a stark financial imbalance. Drew Hinshaw explains that the Vatican is "asset rich and cash poor," relying heavily on museum ticket sales and tourism to fund its operations.

• Drew Hinshaw [03:18]: “You know, the money on Sunday, when... that’s not going to Rome. It’s going to, you know, your local and national church.”

The Vatican's budget deficit has ballooned to approximately 80 million euros, a figure that has tripled over the past decade, exacerbating the financial strain.

• Drew Hinshaw [04:35]: “As for the Vatican's budget deficit, it's around 80 million euros, give or take, which is triple what it was about 10 years ago.”

Reform Efforts Under Pope Francis

Pope Francis, elected in 2013, initiated a series of reforms aimed at modernizing the Vatican's financial practices. His efforts included overhauling bookkeeping methods, slashing cardinal salaries, and bringing in external auditors for the first time in modern history.

• Drew Hinshaw [09:08]: “...he hires, you know, an executive from the accountant firm Deloitte and basically says... You have my blessing to probe our accounts.”

These reforms were met with resistance from within the Vatican hierarchy, highlighting the tension between tradition and the urgent need for financial transparency.

Challenges and Resistance: A Battle Within

Implementing reforms proved to be a formidable task. Drew Hinshaw recounts incidents of sabotage aimed at the Vatican's auditing efforts, illustrating the depth of internal opposition.

• Drew Hinshaw [10:43]: “...the office has been broken into. It’s Monday morning. The bottom of his laptop is unscrewed...”

The situation escalated when the appointed auditor was detained under dubious circumstances, effectively stalling the reform process.

• Drew Hinshaw [11:07]: “The auditor says he hired external consultants to investigate... In June of 2017, Vatican police detained the auditor...”

These events underscore the complexities and dangers inherent in attempting to reform a centuries-old institution.

The Conclave: Electing a Successor Amid Financial Turmoil

With Pope Francis' untimely death, the College of Cardinals faces the daunting task of electing a new pope who can navigate the Vatican out of its financial quagmire. The conclave is marked by intense discussions and divergent perspectives on addressing the deficit.

• Drew Hinshaw [14:07]: “...there's one that can see it in the kind of dollars and cents terms... but there are others who say... Why are we talking about these earthly concerns...”

The primary issues at hand include managing the 2 billion euros in liabilities from the pension fund and combating the entrenched culture of financial mismanagement.

Future Outlook: Balancing Spirituality and Fiscal Responsibility

The episode concludes by pondering the future of the Vatican under new leadership. The institution faces a paradox: immense historical wealth juxtaposed with severe operational deficits. The next pope must embody both spiritual leadership and financial acumen to ensure the Church's survival.

• Drew Hinshaw [16:34]: “...the decisions are taken by clergy who... could talk... about gospel... than, you know, the nuts and bolts of an audit.”

This reflection highlights the monumental challenge of merging the spiritual mission of the Catholic Church with the pragmatic needs of financial stewardship.

Notable Quotes with Attribution and Timestamps

• Jessica Mendoza [00:05]: “Pope Francis was desperate...”

• Drew Hinshaw [05:04]: “...money to reduce punishment in the afterlife...”

• Drew Hinshaw [03:18]: “extremely wealthy city state...”

• Drew Hinshaw [04:35]: “budget deficit... triple what it was...”

• Drew Hinshaw [09:08]: “...executive from Deloitte...”

• Drew Hinshaw [10:43]: “the office has been broken into...”

• Drew Hinshaw [11:07]: “The auditor was detained...”

• Drew Hinshaw [14:07]: “...talk about these earthly concerns...”

• Drew Hinshaw [16:34]: “could talk about gospel... than... an audit.”

Conclusion: An Uncertain Path Forward

"The Financial Mess Facing the Vatican" offers a comprehensive analysis of the Catholic Church's fiscal challenges, blending historical insights with contemporary issues. As the conclave commences, the Vatican stands at a crossroads, with its future contingent on the ability of its next leader to harmonize spiritual guidance with financial responsibility. This episode serves as a crucial examination of how one of the world's oldest institutions grapples with modern economic realities.

For more insightful discussions on money, business, and power, tune into "The Journal" co-produced by Spotify and The Wall Street Journal.