The Vatican City actually has its own coins - the Vatican Euro. This has been the currency since January 1, 1999. Prior to this the currency was the Vatican Lira. This was equivalent to the Italian Lira at the time. The Vatican City had an agreement with the Italian government, whereby Italian Lira were welcomed in the Vatican City and vice versa.
Almost all of Vatican City's little more than 800 citizens either live inside the Vatican's walls or serve in the Holy See's diplomatic corps in embassies (called "nunciatures"; a papal ambassador is a "nuncio") around the world.
Vatican City is a city state that came into existence in 1929. It is therefore to be clearly distinguished from the Holy See, which already was in existence for many centuries before that date.