Some claim that there is a country even smaller than the world's smallest country, Vatican City. They claim that world's actual smallest country is an organization headquartered in Rome called the Sovereign Military Order Of Malta (SMOM for short but also known as the Knights of Malta and also officially the Sovereign Military Hopsitaller Order Of St. John Of Jerusalem, Of Rhodes And Of Malta).
While the Knights of Malta was once an independent country, today it is no more an independent country than any other organization such as the International Federation of the Red Cross and Red Crescent Societies. The Knights of Malta as a religious organization that provides humanitarian and medical assistance worldwide. It has held Permanent Observer status at the United Nations (as does the Red Cross) since 1994 and issues "passports" to its diplomats for diplomatic business but it does not meet the criteria for being an independent country. It lacks territory, a permanent population, police power, and has no economy.
The Knights of Malta was founded in the late 11th century when it established a hospital in Jerusalem to care for ill pilgrims during the First Crusade. The organization expanded and built additional hospitals along the route from Europe to the Holy Land. In addition to their hospitaller duties, the Knights of Malta also waged war against the Muslim "infidels."
Eventually, Jerusalem was recaptured by the Muslims and the Knights of Malta left Jerusalem and spent time in various places, especially the island of Cyprus. In 1309 the SMOM took control of Rhodes (today a Greek island) but had to flee in 1523. They were given Malta in 1530 and built the capital city of Valletta.
Despite the neutrality of the Knights of Malta, Napoleon conquered Malta in 1798 and the SMOM fled once again. Finally, in 1834 the Knights of Malta found a home in Rome, where they still reside.
While the Knights of Malta is recognized as an independent country by the Vatican City (a country that doesn't meet all of the criteria for being an independent country itself) and a handful of other Roman Catholic countries, it does not issue coins or stamps for more than ornamental purposes. Though the Knights of Malta maintains "embassies" in a host of countries (in such places as Russia, Spain, Hungary, and Poland) it does not in others (such as the U.S., Canada, United Kingdom, or Japan).
There are fifty national Knights of Malta organizations and thousands of members (called "knights") worldwide. The United States maintains an association as does Canada and the United Kingdom.