The Pope has set up an inquiry to look into the activities of the troubled Vatican bank amid a new money-laundering investigation and continued questions about the secretive institution.

The Vatican has been drawn into a new controversy after acknowledging that its bank’s new president is also chairman of a shipbuilder involved in the construction of warships – a significant conflict for an institution that has long shunned ties to military manufacturing.

It is “cash only” now for tourists at the Vatican wanting to pay for museum tickets, souvenirs and other services after Italy’s central bank decided to block electronic payments, including credit cards, at the tiny city-state.

THE firing on May 24 of Ettore Gotti Tedeschi, the president of the Vatican Bank, because of a failure to “promote transparency”, must have sent a frisson of fear through the upper echelons of the Roman Curia, coming as it did three decades after another scandal involving the same institution.

The Vatican has said the head of its bank, who is being investigated in a money laundering case, has been ousted after receiving a unanimous vote of no-confidence from bank overseers.

The Vatican has rewritten its 2010 anti-money laundering law after European inspectors found that it did not fully meet their tough standards to combat the financing of terrorism.

AN “error of procedure” at the Vatican bank is being exploited to attack the Vatican with a money- laundering investigation, the bank’s president said in an interview published yesterday.

JUST when the Catholic Church didn’t need another scandal, Italian authorities have seized €23 million from a Vatican bank account and begun investigating top officials of the Vatican bank in connection with a money laundering probe.

The Vatican said today it has posted its third straight financial loss, registering a €4.1m deficit for 2009.

THE Vatican defended the late archbishop Paul Marcinkus, the head of the Vatican Bank whose tenure was marred by financial scandal, from reports yesterday that he ordered the killing of a 15-year-old girl in 1983.