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The pope of the Roman Catholic Church is the head of state of the Vatican City state. But between the death or resignation of one pope and the election of the next, there is an interregnum. While in modern times this is generally only a few weeks, in theory it could again take years, as it occasionally did in the mediaeval period.

Who serves as sovereign of the Vatican City in the interim? Someone must perform at least the civil functions of a head of state, such as recognizing the ambassadors to the Holy See sent by various nations. Even if there is no formal sovereign or acting sovereign, who undertakes these roles?

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The College of Cardinals serves a caretaker rule, but doesn't exercise the full rights of a Papal head of state.

After the death or resignation of a pope, the Holy See enters a period of sede vacante. In this case the particular church is the Diocese of Rome and the "vacant seat" is the cathedra of Saint John Lateran, the cathedral church of the Bishop of Rome. During this period, the Holy See is administered by a regency of the College of Cardinals.

According to Universi Dominici gregis, the government of the Holy See and the administration of the Catholic Church during sede vacante falls to the College of Cardinals, but in a very limited capacity. At the same time, all the heads of the departments of the Roman Curia "cease to exercise" their offices. The exceptions are the Cardinal Camerlengo, who is charged with managing the property of the Holy See, and the Major Penitentiary, who continues to exercise his normal role. If either has to do something which normally requires the assent of the Pope, he has to submit it to the College of Cardinals. Papal legates continue to exercise their diplomatic roles overseas, and both the Vicar General of Rome and the Vicar General for the Vatican City State continue to exercise their pastoral role during this period. The postal administration of the Vatican City State prepares and issues special postage stamps for use during this particular period, known as "sede vacante stamps".

From here.

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