Nine NATO allies have signed up to create a new multilateral institution designed to bankroll the West's military build-up, but the absence of Europe's biggest military and economic powers raises questions about how much financial muscle it can ultimately flex.
Canadian Prime Minister Mark Carney announced the founding members of the Defence, Security and Resilience Bank (DSRB) at the NATO summit in Ankara on Tuesday. The signatories—Canada, Albania, Belgium, Greece, Latvia, Luxembourg, Romania, Turkey and Ukraine—will now shape the bank's initial rules ahead of a planned launch in 2027.
First proposed in 2024 by a group of former NATO advisers, senior military figures and bankers, the DSRB will be headquartered in Canada, with a European base in Luxembourg. Its model borrows from development banks: by pooling members' capital and targeting a triple-A credit rating, the institution aims to borrow cheaply on international markets and pass those savings on through loans and guarantees, potentially raising up to £100 billion (€117 billion) for defence projects.
Cheaper money for costly rearmament
The timing is deliberate. NATO leaders agreed in June 2025 to lift defence spending towards 5% of GDP by 2035, a target that will demand vast sums of new capital. The problem is no longer simply persuading governments to spend more; many defence suppliers, particularly smaller companies, still struggle to secure affordable financing, as commercial lenders have often been reluctant to back the sector.
The DSRB aims to channel cheaper, long-term financing to governments and defence firms, while also providing guarantees to commercial banks. If successful, it could reshape how Western governments finance defence, complementing annual budgets much as the European Investment Bank has done for infrastructure or the World Bank for development. Major lenders including JPMorgan, Deutsche Bank, Commerzbank and ING have already lined up behind the project, alongside Canada's biggest banks.
The missing heavyweights
For all that ambition, the roster is conspicuously light at the top. No G7 economy other than Canada has signed up, and the big European military spenders—Britain, Germany and France—are holding back. Analysts warn this could cap the bank's financial reach.
“This is a beginning, but they may have been hoping for the backing of bigger European players,” said Linus Terhorst of the Royal United Services Institute, though he added that the current commitments should be enough to get the bank “airborne”. Germany has joined discussions as an observer, while Canada says talks are progressing with South Korea.
One reason some large European countries have not joined is that Britain is backing a potentially rival initiative. London is spearheading the Multilateral Defence Mechanism (MDM) alongside the Netherlands, Finland and Poland—the last of which signed up on Monday. Also targeting a 2027 launch, the MDM is designed less as a bank and more as a joint procurement vehicle, letting members buy and stockpile equipment together and keep it off their national balance sheets.
“The multilateral defence mechanism will enable us to procure jointly and stockpile equipment off the balance sheet, ensuring better value for money for taxpayers,” UK Chancellor Rachel Reeves said in the House of Commons last month, during a debate on the Defence Investment Plan. Rather than framing the two as rivals, London casts them as complementary, with Reeves saying Britain is working with Canada on both and positioning the DSRB as the lender to smaller supply-chain firms.
The prospect of overlapping structures—set alongside the European Union's own SAFE defence loan instrument—underlines how urgently, and how experimentally, Western governments are scrambling to mobilise private capital for defence. Canada says the door remains open to new members.
