2-euro coins of Vatican City

Vatican City is a state whose territory is located almost entirely within the Italian capital of Rome. With around 1,000 inhabitants and an area of just 0.44 square kilometres, the state is entirely unique. Vatican City was founded on 11 February 1929 with the signing of the Lateran Treaties, concluded between Cardinal Secretary of State Pietro Gasparri, representing the Holy See, and Italian Prime Minister Benito Mussolini.

The Treaties definitively settled the status of the Vatican, following decades of conflict between the Church and Italy's rulers since the dissolution of the Papal States in 1870. King Vittorio Emanuele II had considered granting the Pope limited sovereign rights, but this was rejected by Pope Pius IX in 1871. For over six decades, the "Roman Question" thus remained unresolved. It was only after the fall of the monarchy and the rise of Fascism in Italy that a solution was found. Mussolini pushed for reconciliation with the Church, and after three months of negotiations the details of the Lateran Treaties were finalised. In total, more than 20 drafts of the treaties were drawn up before they were signed. The Lateran Treaties consist of a Conciliation Treaty, a Concordat and a Financial Convention. Specific details were agreed upon: the Vatican received a precisely defined territory with no access to the sea, and the Italian government pledged not to employ defrocked priests in public service. The Pope also committed to remaining neutral in international disputes and to intervening as a mediator when appropriate. In addition, the Holy See received compensation of 1.75 billion lire for the property losses arising from 1870.