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The newly-elected Pope Francis I may be leader of the world's 1.2 billion Catholics but he only has absolute sovereign powers over the Vatican City, the world's smallest state.
The Vatican's unique status was officially recognised in 1929 after the signing of the Lateran Accords between pope Pius XI and Italian dictator Benito Mussolini.
The pope reigns over an area of 44 hectares (109 acres) which is entirely surrounded by the city of Rome and is made up of palaces and churches but also a petrol station, a supermarket and a post office.
More than a third of the Vatican consists of immaculately-kept gardens.
Vatican City is a third the size of Monaco, the principality on the northern Mediterranean coast, which is the world's next smallest state.
Until 1859, the popes ruled a kingdom spanning over 1.8 million hectares of central Italy with a population of more than three million people.
The Vatican's current population numbers around 600 people, including cardinals, diplomats, gendarmes, Swiss Guards and household staff.
The justice system -- made up of three civil courts -- is based on Italy's 19th century laws and capital punishment was only abolished in 1960.
The pontifical state was established to guarantee freedoms and spiritual independence for the Roman Catholic Church, following Italian unification.
The Roman Curia, the central government of the Catholic Church, is composed of the Secretariat of State, nine congregations and 12 pontifical councils.
The Vatican has its own official newspaper, L'Osservatore Romano, a radio station, a television channel, a museum, a pharmacy, as well as its own private army -- the Swiss Guards -- a corps of 110 men founded in the 16th century.
Salaries paid to lay employees of the Vatican -- in euros -- are low but untaxed.
Trade unions are not permitted in the Vatican but healthcare is free for Vatican employees and the state guarantees medical assistance around the clock.
The Vatican's bank, the Institute for Religious Works, which has been at the centre of several financial scandals, has cash machines in the pontifical state that communicate in Latin -- the Vatican's language for formal documents.
The bank handles the assets of Catholic religious orders and clergy.
Its management is separate from the Holy See but the oversight is conducted by a committee of cardinals -- a system that is currently being overhauled as the Vatican tries to comply with international rules against money laundering.
The Vatican state employs around 4,700 religious and lay people and those salaries combined with renovations make up a large part of its expenses.
The Vatican is also one of the biggest property owners in Rome and benefits from rental revenues, as well as regular payments from national churches.
The pope also receives payments known as "Peter's Pence" -- often in the form of cheques or valuable objects -- from Catholic faithful around the world.
In 2011, the last year for which figures are available, the Vatican's budget had a deficit of 14.9 million euros ($20 million), returning into the red due to the effects of the global financial crisis after a surplus in 2010.