Pope to grace Vatican euro coins

By CNN's Jim Bittermann

VATICAN CITY (CNN) -- The Vatican is the smallest state in the world, but that doesn't mean it can't have it's own army.

And it may have the smallest economy in Europe, but that doesn't mean it can't have its own euro.

As the Italian mint has been busily stamping out euro coins, a small part of the production has been dedicated to the Vatican euro.

Coins worth one and two euro, as well as various values of euro cents, will all carry a profile of Pope John Paul II.

And therein evolved a problem, since -- as an Italian Treasury official points out -- the Vatican euro will in theory circulate throughout Europe, including non-Catholic countries.

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"In some countries it was thought the reproduction of a religious figure would create a problem," says Lorenzo Bini-Smaghi of the Italian Treasury Ministry.

But in the end it was decided because John Paul is the head of state of a religious monarchy, he is no different than any of the other monarchs who will be featured on national euro coins.

It was also decided that since the Vatican will simply be using euros without actually being part of the eurozone, its economic performance will not be subject to the criteria set for the euroland countries.

"The sovereignty of Vatican City will be respected except that they can use euros," says Bini-Smaghi.

Few outsiders have ever been permitted to look over the Vatican books -- one reason no one knows exactly how much the microstate stands to make from minting its own coins.

It is believed, nonetheless, that the Vatican earns a tidy sum each year from the sale of its stamps and coins in packaged sets, mainly to collectors.

One place to find out what a Vatican euro could be worth is the competition. Private coin shops also sell packaged sets of Vatican coins in Italian lire -- at 17 times the face value.

And a 50-year-old lire coin sells for 7,000 times the face value.

Dealers expect the same or better from the Vatican euro -- one reason, perhaps, the pope's negotiators pressed for as many coins as possible.

The Vatican originally tried to round upwards the value of its minted coins from 670,000 euro per year to a nice, even 1 million. But Italian negotiators stood firm.

Even so, the Holy See did win the right to double the number of Vatican euros during Jubilee years or when there is a change of pope.

With a coin sure to rise in value because of its rarity, they are concessions that could prove a blessing.