The Defence, Security and Resilience Bank: Financing a New Era of Strategic Competition

By Matthew Parish, Associate Editor

Sunday 14 June 2026

The post-Cold War period was marked by an assumption that security could be enjoyed as a dividend of prosperity. Defence budgets across much of Europe declined, military industries consolidated and governments increasingly treated war as a remote contingency rather than a present reality. Russia’s full-scale invasion of Ukraine in 2022 shattered that illusion. The subsequent years have revealed a fundamental truth that policymakers had long preferred to ignore: security is not free, and modern defence requires vast amounts of capital.

It is against this backdrop that the proposed Defence, Security and Resilience Bank (DSRB) has emerged as one of the most ambitious institutional innovations in international finance for decades. Conceived as a specialised multilateral financial institution dedicated exclusively to defence, security and resilience projects, the DSRB seeks to address a problem that conventional banking and existing international financial institutions have struggled to solve.

The idea is deceptively simple. Just as institutions such as the World Bank or the European Investment Bank mobilise capital for development and infrastructure, the DSRB would mobilise capital for defence procurement, defence industrial production, strategic supply chains and national resilience programmes. Yet the simplicity of the concept disguises its potentially transformative implications.

The challenge confronting Western governments is not merely one of political will. NATO members have committed themselves to dramatically increased defence expenditure, with alliance discussions increasingly centred upon spending targets approaching five per cent of GDP. The resulting funding requirements are measured not in billions but in hundreds of billions of euros, pounds and dollars. Traditional budgetary mechanisms struggle to absorb such expenditures without creating significant fiscal strain.

The DSRB’s architects argue that a dedicated institution can leverage sovereign backing to achieve a triple-A credit rating, allowing it to raise enormous sums on international capital markets at relatively low cost. Those funds could then be channelled into defence projects, procurement programmes and industrial expansion initiatives that might otherwise be delayed by fiscal constraints.

This is not merely a question of purchasing military equipment. One of the most striking lessons of the war in Ukraine has been the importance of industrial depth. Modern warfare consumes vast quantities of ammunition, electronic components, drones, communications equipment and replacement parts. Defence capability is increasingly determined not only by what a country possesses at the outset of a conflict but by how rapidly it can manufacture and replenish supplies once hostilities begin.

Consequently, proponents of the DSRB emphasise supply-chain resilience as much as weapons procurement. The institution’s mandate is intended to encompass financing for manufacturers, subcontractors, logistics providers and technology firms operating throughout the defence ecosystem. Deep-tier supply-chain financing, long a feature of commercial trade finance, could become an important component of national security strategy.

Another significant objective is overcoming the lingering reluctance of parts of the financial sector to engage with defence industries. For years many banks, investors and environmental, social and governance (ESG) frameworks treated defence as a problematic sector. While attitudes have shifted markedly since 2022, smaller defence firms and start-ups often continue to encounter financing difficulties. The DSRB is intended partly as a mechanism for crowding in private capital by providing guarantees, risk-sharing structures and institutional credibility.

Support for the project has already attracted a notable coalition of financial institutions. Major international banks including ING, JPMorgan, Commerzbank, LBBW, RBC and later Deutsche Bank have publicly expressed support for the initiative and have participated in advisory or developmental roles. Their involvement reflects a growing recognition that defence finance may become one of the defining investment themes of the coming decade.

Yet substantial obstacles remain.

The first is political. While the concept has attracted support within parts of the European Parliament and among numerous former NATO officials, governments remain divided. Some states prefer to utilise existing institutions and mechanisms rather than establish an entirely new organisation. Germany, for example, has argued that current European financing tools should be prioritised before creating additional structures.

The second challenge concerns governance. Any institution capable of mobilising over £100 billion or more for defence purposes will inevitably raise questions regarding accountability, procurement standards, national sovereignty and strategic priorities. Decisions regarding which industries, technologies or countries receive financing are inherently political. Designing governance structures that are both efficient and broadly acceptable may prove as difficult as raising the capital itself.

The third challenge is strategic coherence. Europe already possesses a complex web of defence initiatives, national procurement agencies, export-credit institutions and multinational funding mechanisms. A successful DSRB must complement rather than duplicate these arrangements. Its value proposition lies in acting as a financial accelerator rather than another layer of bureaucracy.

Nevertheless the underlying rationale remains compelling. The strategic environment confronting democratic nations today differs profoundly from that of twenty years ago. The challenge extends beyond conventional military threats to encompass cyber security, critical infrastructure protection, supply-chain resilience, technological sovereignty and industrial mobilisation. Security has become inseparable from economic capacity.

In this sense, the Defence, Security and Resilience Bank reflects a broader historical shift. The twentieth century witnessed the creation of institutions designed to finance reconstruction and development after catastrophic wars. The twenty-first century may witness the creation of institutions designed to prevent strategic weakness before catastrophe occurs.

Whether the DSRB ultimately succeeds in its present form remains uncertain. Multilateral institutions are notoriously difficult to establish, and many ambitious proposals never progress beyond the planning stage. Yet the emergence of the idea itself is significant. It demonstrates that policymakers, financiers and military planners increasingly recognise that security is not merely a matter of strategy or technology. It is also a matter of finance.

Wars are fought on battlefields, but military power is built in factories, laboratories and balance sheets. The Defence, Security and Resilience Bank is founded upon the proposition that if democratic nations wish to preserve their security in an era of renewed geopolitical competition, they must learn to finance resilience with the same sophistication that previous generations financed development.

That proposition may prove to be one of the defining institutional innovations of our age.