Claim: Ministates include a country.

Monaco -LRB- -LSB- ˈmɒnəkoʊ -RSB- -LSB- mɔnako -RSB- -RRB- , officially the Principality of Monaco -LRB- Principauté de Monaco -RRB- , is a sovereign city-state and microstate , located on the French Riviera in Western Europe . France borders the country on three sides while the other side borders the Mediterranean Sea . Monaco has an area of 2.02 km ² and a population of about 38,400 according to the last census of 2015 . With 19,009 inhabitants per km ² , it is the second smallest and the most densely populated country in the world . Monaco has a land border of 5.47 km , a coastline of 3.83 km , and a width that varies between 1700 and . The highest point in the country is a narrow pathway named Chemin des Révoires on the slopes of Mont Agel , in the Les Révoires Ward , which is 161 m above sea level . Monaco 's most populous Quartier is Monte Carlo and the most populous Ward '' is Larvotto/Bas Moulins . Through land reclamation , Monaco 's land mass has expanded by twenty percent ; in 2005 , it had an area of only 1.974 km ² . Monaco is known as a playground for the rich and famous , due to its tax laws . In 2014 , it was noted about 30 % of the population was made up of millionaires , more than in Zürich or Geneva .   Monaco is a principality governed under a form of constitutional monarchy , with Prince Albert II as head of state . Although Prince Albert II is a constitutional monarch , he wields immense political power . The House of Grimaldi have ruled Monaco , with brief interruptions , since 1297 . The official language is French , but Monégasque , Italian , and English are widely spoken and understood . The state 's sovereignty was officially recognized by the Franco-Monegasque Treaty of 1861 , with Monaco becoming a full United Nations voting member in 1993 . Despite Monaco 's independence and separate foreign policy , its defense is the responsibility of France . However , Monaco does maintain two small military units .   Economic development was spurred in the late 19th century with the opening of the country 's first casino , Monte Carlo , and a railway connection to Paris . Since then , Monaco 's mild climate , scenery , and gambling facilities have contributed to the principality 's status as a tourist destination and recreation center for the rich . In more recent years , Monaco has become a major banking center and has sought to diversify its economy into services and small , high-value-added , non-polluting industries . The state has no income tax , low business taxes , and is well known for being a tax haven . It is also the host of the annual street circuit motor race Monaco Grand Prix , one of the original Grands Prix of Formula One .   Monaco is not formally a part of the European Union -LRB- EU -RRB- , but it participates in certain EU policies , including customs and border controls . Through its relationship with France , Monaco uses the euro as its sole currency -LRB- prior to this it used the Monégasque franc -RRB- . Monaco joined the Council of Europe in 2004 . It is a member of the Organisation Internationale de la Francophonie -LRB- OIF -RRB- .