The planned Defence, Security and Resilience Bank would mark a shift from limited defence-finance mechanisms to a permanent international treaty institution designed to make private capital usable for military, security and resilience projects. Backers say Luxembourg would help do that through sovereign guarantees, investor structures and later lending.
Robbie Boyd, a senior figure in the DSR Bank Development Group, and 
“This is not a NATO bank, this is a bank for all democracies from across the world,” Boyd said. “It provides a political way of expressing that they are democracies, and it also provides a political way of working against those who work against us.”
The significance for Luxembourg is not simply that the country has been named as a European base. Boyd and Guzman described a role in which the financial centre would help turn sovereign backing into guarantees, investor structures and later lending for defence, security and resilience projects, including projects tied to lethal military capabilities.
Finance as deterrence
The bank is being designed as a treaty-based organisation, not a licensed bank in the usual commercial sense. “The Defence, Security and Resilience Bank is a treaty-based organisation,” Boyd said. “It’s not, as many may imagine it to be, a banking licensed financial institution.”
That structure would allow the planned bank to go beyond the safer language of dual-use investment. “It’s not just dual-use technologies,” Boyd said. “It can be used for lethal technologies, because this institution is being established by its founding members, the nations, to finance deterrence.”
For Guzman, the case for bringing financial centres into the project is that modern deterrence no longer depends only on armies and government budgets. Defence, security and resilience had become questions of sovereign capability, finance and politics, he said, with credibility resting on equipment, technology, infrastructure, supply chains and people.
Europe’s finance end
Canada has been identified as the planned global headquarters, while Luxembourg has been identified as the European base. Boyd and Guzman said the Luxembourg role should be read in operational terms, not only as a location decision.
The choice was linked to Luxembourg’s role in global bond markets, its cluster of financial and multilateral institutions and its ability to coordinate across public and private finance. “Luxembourg is one of the best global financial centres in the world,” Boyd said.
Luxembourg’s diplomatic position also mattered, Boyd said. As a member of NATO, the EU and the UN, the country could help connect institutions around a bank meant to sit between sovereign policy, military need and commercial finance.
Guzman framed Luxembourg’s value as a familiar function for the financial centre: connecting capital, institutions and public authorities. He pointed to the country’s AAA rating, its experience hosting bodies such as the European Investment Bank, European Investment Fund and European Stability Mechanism, and the wider ecosystem around cross-border finance. “The idea is to use the ecosystem that is already built in Luxembourg,” he said.
Five needed
Canada and Luxembourg are leading the effort, while Romania has publicly declared its role as a founding member. Other countries are going through their own processes.
“We only need five,” Boyd said. “It’s not that there will be five. We only need five for the next phase.”
Around 10 countries are in view but have not yet signed up. Some could move faster because they had mechanisms to capitalise the bank more quickly, Boyd said, while others would need longer budget processes.
That threshold is part of the project’s design. Rather than waiting for a broad international institution to be built at full scale, the bank is intended to move once a smaller group of countries can create the treaty base, provide capital and begin the guarantee work. The declaration would therefore be a step towards creating the bank, not the launch of an already operating institution.
Guarantees first
The first practical shift would come through guarantees rather than full sovereign lending.
The financing model, Guzman said, would involve 20% paid-in capital and 80% callable capital. That means member countries would put in part of the money upfront, while also promising a larger sum that could be called on if needed to support the bank’s obligations and credit strength.
Once member countries had signed the treaty, implemented it in local law and provided the necessary funding, the bank would start operating, Guzman said. Its guarantee model would then be used to help commercial banks finance defence, security and resilience projects. “The mechanism will be for the DSR Bank to provide guarantees to these banks to fund the DSR,” he said.
Charter principles have been agreed after negotiations in Montréal, Canada, and are being circulated among countries. Once a declaration is made, the first countries would need to take the treaty back through their own systems. “The charter has been completed,” Boyd said. “That’s one of the big moments.”
The bank could be in place by early 2027, with guarantees to investors in member countries likely to be its first service, Boyd said. A full AAA rating would take longer, with sovereign-style loans more likely from 2028, because the bank would first need the top credit standing required to borrow and lend cheaply over long periods.
That sequence makes guarantees the near-term state change. The bank would not start by replacing other defence-finance mechanisms; it would start by trying to make private capital usable where commercial lenders currently hesitate. Boyd contrasted that permanence with the EU’s SAFE mechanism, a €150bn EU instrument designed to help member states fund joint defence procurement and industrial production, arguing that the DSRB was designed to grow as more countries joined rather than operate as a time-limited crisis response.
The capital gap
The central innovation, Boyd and Guzman said, would be to use sovereign-backed guarantees to change the risk profile of defence and resilience investment for private banks and funds.
For banks and funds, the issue was not simply ideology or reputational risk, Boyd said. Defence financing also runs into compliance, sector-knowledge and regulatory-capital constraints, making the guarantee central to the project’s design. “It’s not about easing regulation, it’s about providing them with real incentive, which is a guarantee of 80% on their investments,” he said.
Existing financing mechanisms were useful but did not close the gap because defence, security and resilience projects often fall outside the mandates, risk appetite or compliance frameworks of traditional lenders, Guzman said. “They’re very helpful, but they’re insufficient,” he said. “Because of the statutes, because they do not have the DSR experience, because of Basel IV, because it’s probably too much of a risk in terms of the sectors of activity, because they have some limitations in terms of ESG compliance.”
The planned bank is meant to sit in that gap, making projects financeable for commercial lenders without requiring each investment to be treated as an exception. “They see also that there’s a gap, and the gap is being fulfilled by the DSR,” Guzman said.
The two men pointed especially to SMEs. Guzman cited European Commission work indicating that defence SMEs have greater difficulty accessing financing than civilian companies, and said the problem could apply to firms working on technologies such as drones when the application shifts from civilian to defence or security use. “If you are producing phones or drones, but for civilian applications, you will get that financing,” he said. “If it’s for defence or security, then they will struggle to get this financing.”
Defence SMEs had often been pushed towards venture capital when what they needed was access to debt and a broader financing stack, Boyd said. “I have felt for a long time for SMEs, and the fact they can only really get venture capital financing in the defence space,” he said. Guarantees from the bank, he argued, could allow banks, funds and other investors to finance factories, production capacity and technology development on better terms.
Beyond dual-use
The planned bank would also change the perimeter of what an international lending institution can finance. It would not be limited to indirect support for governments or to dual-use projects that can be framed primarily as civilian technologies.
It could lend directly to companies when a member country identified a project as a national priority. In military terms, that could include production capacity for weapons systems or other lethal capabilities.
Military-industrial capacity was Boyd’s clearest example of the kind of project the bank could support if a member country treated it as a national priority. “Let’s say Rheinmetall right now needed to buy Volkswagen, so that it could retool the factories and rapidly increase the manufacturing of tanks, which we need in Europe now,” he said.
He presented that as an illustration of the type of national-priority project a member country could bring to the bank, rather than as a live loan application. The bank could also support strategic technologies with security and resilience value, he said, giving the example of long-term finance for a possible breakthrough in DNA-based data storage.
The point was that the bank could lend directly to a company when a member country made the project a national priority. That would distinguish it from mechanisms focused only on lending to governments. “That is another way, a tangible way, by which a company could benefit from that sort of direct loan as a national priority, and that’s unique to the DSR Bank,” Boyd said.
The supply-chain argument is part of the same logic. Boyd pointed to rare earths and other inputs now dominated by countries that Europe and its allies see as strategic risks. “If your adversary controls your supply chains, you don’t have defence,” he said.
Still in formation
The DSR Bank Development Group has no sovereign decision-making power and was set up to bring expertise together and help governments move towards a treaty-based institution.
Power is now being handed over to countries, with Canada taking the global lead and Luxembourg the European role, Boyd said. “The power has transferred from the development group and is in the process of being handed over to Canada as the global leader, and here in Europe, Luxembourg is the European leader,” he said.
DLA Piper’s role was legal rather than political, Guzman said. “We are not lobbying, we are simply advising the group on the legal matters,” he said.
The legal work will not end with the treaty. The bank’s creation would require implementation in local jurisdictions and would touch areas such as tax, employment and cybersecurity, Guzman said. “As soon as the bank is built, is formed, then you will have a legal framework around that bank,” he said. “It goes about implementing the treaty in local jurisdictions.”
For Luxembourg, the test is therefore not only whether the country becomes the bank’s European base. It is whether its financial-centre infrastructure, public-sector credibility and multilateral positioning can help turn a planned treaty institution into a working channel for private finance into military, security and resilience projects. Guzman framed that as part of a wider shift in which democracies have to think differently about how they pay for preparedness, not only how they set defence policy.
