A group of mostly small NATO allies has agreed to participate in a new institution created to finance the military buildup of the West, but the indecisiveness of leading European powers raises questions about the scale of financial resources it will ultimately have at its disposal. Canadian Prime Minister Mark Carney announced at the NATO summit in Ankara on Tuesday the nine founding countries of the Defence, Security and Resilience Bank (DSRB), calling it a pillar of the collective security of allies. The countries that signed the founding documents include Canada, Albania, Belgium, Greece, Latvia, Luxembourg, Romania, Turkey, and Ukraine; they will define the initial operating rules of the bank ahead of its planned launch in 2027. The idea of creating the DSRB was first proposed in 2024 by a group of former NATO advisors, senior military officials, and bankers. The bank's headquarters will be located in Canada, with a European base planned in Luxembourg. ## ## Cheap Money for Expensive Rearmament The timing is not coincidental. In June 2025, NATO leaders agreed to increase defense spending to about 5% of GDP by 2035, which will require attracting a colossal amount of new capital. The problem is no longer just convincing governments to spend more on defense. As military budgets grow in NATO countries, many defense contractors, especially small companies, still face difficulties in obtaining affordable financing, while commercial lenders are often reluctant to work with this sector. The DSRB concept largely borrows from the approach of development banks. By pooling the capital of participating countries and achieving a top credit rating of AAA, the bank aims to borrow cheaply on international markets and pass on the benefits of lower borrowing costs through loans and guarantees, mobilizing up to £100 billion (€117 billion) for defense projects. The ultimate goal is to direct cheaper long-term financing to governments and defense companies, as well as provide guarantees to commercial banks. If successful, the DSRB could change the approach of Western governments to defense financing and complement annual defense budgets — similar to how the European Investment Bank helps finance infrastructure across Europe, and the World Bank funds projects in developing countries. ## ## Missing Heavyweights Despite the scale of the initiative, the absence of major players stands out in the list of participants. No G7 economy, except Canada, has yet joined the initiative; major European military powers — the UK, Germany, and France — are waiting, and, as analysts warn, this could limit the bank's financial capabilities. "This is a start, but perhaps they were hoping for support from larger European players," says Linus Tergorst from the Royal United Services Institute, adding that current commitments should be sufficient for the bank to operate effectively. Germany is participating in discussions as an observer, and Canada reports that it is negotiating with South Korea. One reason some major European countries have not joined the DSRB is that the UK is betting on a potentially competing initiative. The UK is leading a separate proposal — the Multilateral Defence Mechanism (MDM) — together with the Netherlands, Finland, and Poland, which joined the project on Monday. The MDM, which is also scheduled to launch in 2027, is designed not so much as a bank but as a joint procurement mechanism that allows participants to collectively acquire and stockpile weapons without reflecting these costs in their national balances. "The Multilateral Defence Mechanism will allow us to jointly procure and stockpile weapons off-balance sheet, ensuring more efficient use of taxpayers' money," said UK Chancellor of the Exchequer Rachel Reeves in the House of Commons last month during debates on the Defence Investment Plan. In London, officials prefer not to pit the two initiatives against each other but to present them as complementary: according to Reeves, the UK is working with Canada on both and sees the DSRB as a lender for smaller companies in supply chains. The prospect of overlapping structures — alongside the EU's own SAFE credit mechanism for the defense sector — underscores how urgently and sometimes experimentally Western governments are trying to mobilize private capital for defense. Canada emphasizes that the doors for new participants remain open. Whether the largest economies in Europe eventually decide to join the initiative, support competing projects, or continue to rely on existing EU mechanisms will largely determine whether the DSRB becomes one of the key pillars of defense financing in the West or remains a smaller-scale institution.