Cardinal-Bishops, Cardinal-Priests, Cardinal Deacons?

Could someone explain to me the purpose of having these 3 levels in the College of Cardinals?

Why must each Cardinal have a titular see or church in Rome?

Each level is equal - all cardinals are bishops. The level is just telling what the office was like in the origin. I can give a brief overview of it here:

  • The cardinal BISHOPS are people working permanently in the Vatican administration. They are titular bishops of the ancient dioceses imediately close to Rome; Ostia, Palestrina, Frascati, Albano, Velletri-Segni, Porto-Santa Rufina and Sabina-Poggia Mirteto. The tradition since the 13th century is that the dean of the cardinal college is supposed to be titular bishop of Ostia.

  • The cardinal PRIESTS were originally the parish priests of Rome. Today they are bishops of dioceses outside Rome. The archpriest of the Lateran Cathedral is always a cardinal priest.

  • The cardinal DEACONS was originally the seven deacons of Rome. Later on they became 14. Today there’s no limit on how many they can be; the title is normally given to men that are not bishop in an existing diocese when they’re created cardinals. The archpriests of St. Peters Basilica and Santa Maria Maggiore are usually cardinal deacons.

If you are really interested, then read the section of Baart, The Roman Court, starting here.

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