The judge decided there was still a need to keep Monsignor Nunzio Scarano in prison due to concerns that he could tamper with evidence or try to escape if released, the sources said.
Scarano, who had close connections to the Vatican bank, was arrested last week along with Giovanni Zito, a secret services agent, and financial broker Giovanni Carenzio.
They have been accused of plotting to bring 20 million euros ($26 million) in cash into Italy from Switzerland for Scarano's rich shipping industry friends in the southern city of Salerno. Scarano is under a separate investigation there on suspicion of money laundering.
Scarano's lawyer said he would appeal against the judge's decision. His defense team had asked that he be transferred to house arrest in a parish or another religious institution such as a convent so that he could say Mass.
(Reporting by Paolo Biondi; Writing by Catherine Hornby; Editing by Kevin Liffey)
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