Tiny haven San Marino fights for banking life

SAN MARINO: The world's oldest republic has seen medieval intrigue and papal army invasions in its 1,708-year history, but a modern-day banking scandal and blitz on tax havens risks bringing San Marino to its knees.

From its hilltop perch near Italy's Adriatic coast, the offshore banking center just a third of the size of Washington DC is battling a concatenation of crises - capped by a money-laundering scandal at its largest bank - that has forced a frantic rethink of its financial model.

"We're not going to hide that this is a difficult time for San Marino," Antonella Mularoni, the state's foreign secretary said in her office with 19th-century frescoes on the ceiling.