Recent plans to physically merge the US Vatican Embassy with the US Italian Embassy are an insult to over a billion Catholics worldwide.
The excuses of economy and security do not ring very true, and it looks like an attempt to reduce The Vatican to a lower diplomatic status.
The Vatican is a most important cross-roads of international diplomacy that, because of its inherently supra-political nature, warrants the greatest diplomatic respect.
Certainly the greatest country in the world, the USA, can afford to continue maintaining a suitable embassy there.