Nine NATO-member countries announced the launch of a new type of bank at the trans-Atlantic group's annual summit in Ankura, Turkey on Tuesday.
The Defense, Security, and Resilience Bank will back loans made by commercial banks to defense firms and lend to member governments, which include Canada, Ukraine, and seven other European countries, for defense purposes.
This essay, originally published on April 13, 2026, argues Europe requires such a bank if it is to take full responsibility for its defense.
Europe has effectively been at war since 2022. Russia's drones are still flying over European airports, its ships continue to sabotage critical undersea cables, and its cyberattacks across the continent are surging.
Europe still isn't ready to fight back.
There have been fits and starts of ambitious defense measures. Last year, the European Commission sought to mobilize 800 billion euros under its Readiness 2030 plan, the European Union earmarked EUR150 billion for the Security Action for Europe, or SAFE, program, and the European Investment Bank quadrupled its defense spending to EUR4 billion. But if Europe is to take full responsibility for its own security -- and President Donald Trump has made clear that it needs to -- what currently exists isn't enough.
It helps EU governments borrow to procure defense materials by issuing low-interest, long-maturity loans. It does nothing to promote more supply; SAFE offers no mechanism for guaranteeing commercial bank lending to defense firms, for instance. The fact that the program is already so heavily oversubscribed clearly signals both the demand and the urgency for more help. Meanwhile, the EIB is limited in what it can do by structural constraints: Its own policies prevent it from financing weapons and ammunition. As the EIB's president rightly said last year, the bank "isn't a defense ministry."
This is where the proposed Defence, Security and Resilience Bank, or DSRB, could come in and cover ground the current mechanisms cannot.
The DSRB is a straightforward idea: a multilateral bank, owned and overseen by democratic states. Rob Murray, formerly the head of innovation at NATO, began working on the idea in 2018. The bank is now well beyond the drawing board. Major global banks have signed on to help structure the institution, and its backers plan to have it operational by the end of the year.
The bank would raise funds by issuing AAA-rated bonds on global capital markets and would then lend to member governments and guarantee loans made to defense firms by commercial banks. By pooling allied credit strength, these loans would be made at rates most NATO members can't access on their own and over the long time frames that defense investment demands. Importantly, there would be no joint debt and no shared liability. Each country answers only for its own equity stake, which preserves national control.
The gap the DSRB is best placed to fill is on the supply side, helping companies that develop and build defense equipment access capital. This is especially true for the growth-stage firms across Europe, which are too mature for early-stage venture capital but too small and too risky for conventional bank lending.
Europe has relatively few investment funds that do the type of investing required to scale these early-stage companies. And after years of ESG-driven retreat from the defense sector, European commercial banks lack both the appetite and the internal expertise to lend to these firms without guarantees. A DSRB-backed guarantee structure would address both these issues.
The European capital markets also deserve more attention. The EU's Savings and Investment Union project aims to keep European capital close to home by channeling it into productive, long-term capital market investments. The DSRB's AAA-rated bonds would be precisely the kind of high-quality, euro-denominated instrument that a deeper European capital market could absorb. Far from competing with the Savings and Investment Union, the DSRB could become a compelling use-case for the program.
Canada has emerged as a champion of the DSRB. Under Prime Minister Mark Carney, who has made strengthening Canada's strategic autonomy a national priority, Canada has taken a leading role in establishing the bank and hosting meetings with partner countries to begin negotiations on the bank's charter. Canada has already lined up its major banks as partners, and its biggest cities are vying to host the bank's headquarters.
European defense and finance ministers are more lukewarm toward the DSRB concept. Germany says it prefers the existing SAFE program. But the DSRB would complement SAFE, not compete with it. Berlin knows this, or at least Deutsche Bank does, given that the German bank is one of the DSRB's partner institutions. The German government's current position amounts to telling its country's flagship lender that it is wrong about how defense should be financed. That is an unusual stance for an export economy that prides itself on listening to industry.
The United Kingdom's Treasury has said the DSRB wouldn't deliver sufficient value. More than 800 British defense companies have publicly disagreed. The U.K. says it wants to spend 2.5% of gross domestic product on defense, yet the country faces serious fiscal constraints. A multilateral guarantee structure like the DSRB's is precisely the kind of tool that could help square that circle.
France has been notably quiet on the DSRB, despite the fact that it has the strongest defense industrial base in Europe with firms like Naval Group, Dassault, Thales, and MBDA. Last year, the country became the world's second-largest arms exporter. Yet Paris has barely commented on the DSRB. In diplomacy, that signals internal disagreement or caution.
Perhaps France fears that its strategic autonomy would be weakened by joining a bank that it would only partly own. But joining the DSRB would actually strengthen France's strategic position by facilitating capital inflows. If Paris doesn't become involved now, it risks spending the next decade complaining about rules it chose not to shape.
As the joke goes, Europe likes being concerned. The DSRB is a way to translate that concern into action. The countries that join now will write the bank's charter, while latecomers will have to accept the terms drafted by others.
Europe's three largest economies have every reason to be the leading voices at the table. After all, the threats driving the DSRB, such as Russian aggression, supply chain fragility, and defense industrial underinvestment, are European problems. Letting Canada solve them isn't a viable strategy.
Guest commentaries like this one are written by authors outside the Barron's newsroom. They reflect the perspective and opinions of the authors. Submit feedback and commentary pitches to ideas@barrons.com .
Christopher Collins is a fellow with the Polycrisis Program at the Cascade Institute at Royal Roads University. Mike O'Sullivan is author of The Levelling -- What's Next After Globalization?.
This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.
(END) Dow Jones Newswires
July 07, 2026 14:27 ET (18:27 GMT)
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