Ecclesiastical Economics: The Pax Bank

The 20th World Youth Day is well underway: 400,000 faithful have come to Cologne to show their Catholic devotion and that number is expected to double for Benedict XVI's mass on Sunday.

The massive event is drawing financial support from many sources, including the German dioceses, the city of Cologne, the state of North Rhine-Westphalia, the Federal Government and the European Union. Pilgrims are also required to pay a fee according to the economic strength of their home country. The Cologne-based Pax Bank is administering all the pontifical resources.

The bank manages the finances of priests and other clergy members in the Catholic Church, as well as church institutions like the dioceses and the charity organization Caritas. In a modest edifice in Cologne's city center about 180 employees make sure that finances of the church and its leaders stay in the black. They are also managing the finances of the World Youth Day.

What does it mean to manage monies of this magnitude? Dr. Christoph Berndoff, Director of the Pax Bank, explained the nitty gritty of the bank's mission to Deutsche Welle. The Pax Bank, he said, is responsible for "organizing the transactions both nationally and internationally, as well as securing foreign currency exchange rates from nearby countries like England and Switzerland as well as Australia, America and Canada."

Pass the collection plate, please!

For World Youth Day 2005, the Pax Bank, founded in 1917, designed a finance concept to ensure a smooth flow of funds during the mammoth event. It also handles mundane tasks like collections during mass.

At the last World Youth Day in Toronto, the church was disappointed by a poorly managed collection system unable to deal with the overwhelming masses of faithful. The Pax Bank in Cologne is well prepared to collect from each and every pilgrim, said Berndoff.

"For the final mass, where we're expecting over 800,000 worshipers, the collection will be organized with many, many points where people can make a donation," he said. "It won't happen again that, like in Toronto, lots of eager donators weren't able to even reach a collection box."

A bank with a moral mission

The Pax Bank, unlike most other banks, has something of a spiritual mission. Founded by the parish priest Peter Limberg as a savings-and-loan bank, it was from the beginning a financial institution espousing values such as self-reliance and autonomy. Its purpose has been, according to Berndoff, to be a refuge for funds the clergy did not entrust leaving to "worldly" banks.

"The special thing about the Pax Bank," Berndoff said, "is that we only deal with Church business. Otherwise, we're really just a normal bank. We offer similar services, however ours are tailored to the needs of the clergy, especially their retirement funds, a major issue in Germany and all over the world today."

Aside from serving the clergy and managing World Youth Day finances, the Pax Bank, which deals with an investment volume worth three billon euros, must monitor its investments to ensure a high ethical standard. This is the greatest mission of the bank, said Berndoff.

"If we don't look at the ethical implications of our investments, who else will do it?" asked Berndoff. "Only a bank shaped by Christian values will ensure that our investments meet a certain standard."

Currently the bank has about 5,000 institutional customers, from small parishes to large Catholic hospitals. In addition there are about 24,000 private Christian customers, including evangelical, non-Catholic ones. As for atheists, they're out in the cold.

"It doesn't come into question," Berndoff said. "Our business is shaped by Christian values, and atheists can't open an account here."