<P> According to the EU 's Copenhagen criteria which define what states are eligible to join the EU , a candidate state must be a free market democracy . Given that the Holy See is a theocracy it does not meet the criteria . However , as it is so small , and surrounded by an EU state ( Italy ) , it is intrinsically linked to the EU . Vatican City has an open border with the EU and intends to join the Schengen Information System . It also uses the euro as its sole currency and has an agreement with the EU allowing them to mint their own coins . The EU gave Italy authority to negotiate a deal with the Holy See in 2000 which allowed the Holy See to mint a maximum of € 670,000 . After a review of the arrangements , a new agreement came into force in 2010 which allowed the Holy See to mint € 1 million a year ( plus up to an additional € 300,000 on special occasions ) . </P>
who is allowed to be apart of the european union
a candidate state must be a free market democracy