Vatican State
The Vatican City is the smallest country in the world (44 hectares) and the world headquarters of the Roman Catholic Church, ruled by the Pope, who has absolute executive, legislative and judicial powers. It is entirely surrounded by Rome. It is separated from Rome by medieval and renaissance walls.
It has its own constitution, postal system (reputedly faster and more reliable than the Italian system) and flag. The currency is the Euro, though it is not part of the European union. It has its own railway station and its own, very influential, newspaper, the Osservatore Romano.
The Vatican has its own army of about 100 soldiers, the Swiss Guard. Saint Peter’s Square is under control of the Italian police. Several buildings outside the Vatican walls, just like Castel Gandolfo (the pope’s summer residence) have the privilege of extraterritoriality.
In 1929 the Lateran Treaty was signed between Benito Mussolini and Pope Pius XI, which gave the Papal states to Italy and sovereignty over the Holy See plus a considerate financial compensation to the Catholic Church.
The Vatican gets its money from Catholics from all over the world (Peter’s pence), interest on its investments and profits from its bank. Of course the Vatican museums also attract more than 10.000 visitors a day. Some of those visitors buy stamps, some of them books and posters, some of them eat in the restaurant in the Vatican Museums and some of them visit the dome of Saint Peter’s. The Vatican owns land and apartments all across the city, which is rented out at Roman rates.