Canada says it will host new multilateral defence bank as founding nations agree on charter.
Canada has secured the right to host the Defence, Security and Resilience Bank, a proposed multilateral financial institution designed to fund the rearmament of allied nations facing heightened geopolitical risks. The decision was finalised after the third and final round of negotiations hosted by Canada in Montreal, involving the 19 founding countries of the bank. The announcement was confirmed by Canada’s finance ministry late on Wednesday.
The negotiations brought together representatives from 18 countries to work toward a founding charter that defines the governance and operations of the bank. Participating countries unanimously agreed that Canada, as host of the negotiations, would serve as the future headquarters of the DSRB once the charter is ratified.
What Is the DSRB?
The DSRB has been in development for several months, led largely by Canada. It is a proposed multilateral bank owned exclusively by nation-states, designed to mobilise capital to help allied governments finance their defence, security, and resilience capabilities. The bank is designed to solve three problems: provide governments with long-term, low-cost finance without placing burdens on their balance sheets; help governments to procure defence equipment more rapidly and intelligently; and mobilise private capital by offering guarantees to commercial banks financing defence companies along the supply chain.
The bank was proposed by former NATO security advisers, senior ex-military personnel, and bankers, and its aim is to create a triple-A rated institution capable of raising 100 billion pounds, approximately $135 billion, to fund defence projects, particularly in countries that may struggle to access cheaper finance.
Canada’s Role and Backing
Ottawa has been the most prominent champion of this initiative. Canada’s Finance Minister François-Philippe Champagne, Minister of National Defence David McGuinty, and Minister of Foreign Affairs Anita Anand have all been publicly backing the effort. Isabelle Hudon, President and CEO of the Business Development Bank of Canada, has served as Canada’s lead negotiator.
Prime Minister Mark Carney has also expressed support. Champagne said: “These negotiations are a critical step towards bringing the DSRB concept to fruition and establishing this new multilateral defence-focused bank.
Canada is on track to hit NATO’s 2% of GDP spending target this fiscal year and is on a pathway to meet NATO’s Defence Investment Pledge of spending 5% of GDP on defence by 2035. Budget 2025 includes more than $80 billion in defence investments.
On the banking side, JPMorgan, Deutsche Bank, and Royal Bank of Canada are among the institutions working with the DSRB to support its launch. Canada’s Big Six banks have all committed to the initiative, with BMO the last to confirm its support, joining RBC, CIBC, Scotiabank, TD, and National Bank as partners.
Setbacks and Sceptics
The road to this point has not been without friction. Britain and Germany have both distanced themselves from the DSRB. Britain has instead championed its own separate multilateral finance initiative alongside the Netherlands and Finland, aimed at drumming up private finance to procure weapons, munitions, and military equipment.
There are also questions about the economic logic of the bank, particularly for countries like Canada with strong credit ratings. The Globe and Mail noted that Canada’s debt is already rated AAA by S&P Global and its bond yields are among the lowest in the G20, making it difficult for the DSRB to offer Canada meaningfully cheaper financing than it can already access from international markets. Critics have argued that any “cheaper” borrowing Canada receives through the institution would ultimately be subsidised by Canada itself or other key members.
The bank’s potential benefit may be more meaningful for Central and Eastern European allies that are still reliant on ageing Soviet-era equipment and require large-scale modernisation, including jets, armoured vehicles, and transport capabilities. As DSRB CEO Rob Murray has put it, “many Central and Eastern European nations still grapple with the legacy of the Cold War, reliant on aging Soviet-era equipment to defend themselves.”
The Bigger Picture
The establishment of the DSRB comes at a time when democratic allies are reevaluating their approach to defence funding. Political leaders are often under pressure to boost defence spending, but face budgetary constraints that make it politically challenging to significantly increase defence spending. An institution like this is intended to help bridge that divide by pooling resources and accessing the global bond market.
The bank could also provide financing to non-NATO members in the Indo-Pacific, allowing for pooled procurement, leasing and supply chain integration that enhance interoperability.
The DSRB has gone from idea to institution with the signing of the founding charter, and the confirmation that Canada will host the bank. The next phase will see the bank ratified by member nations and the host city for the bank selected from Montreal, Ottawa, Toronto and Vancouver, which have all put in bids.
