Canada has begun convening international partners to explore the creation of a multinational "Defence, Security and Reconstruction Bank" intended to mobilize large-scale financing for allied defence projects. Canada's finance minister announced on social media that more than ten countries discussed the proposal in a meeting hosted by Ottawa, and that Isabel Hudon, CEO of the Business Development Bank of Canada, will lead Canadian engagement with potential partners over the coming months.
Supporters envision a state-backed institution with an AAA credit rating capable of raising roughly $135 billion to underwrite defence projects in Europe and other NATO member states. The idea is to create a global, government-supported vehicle that can borrow on favourable terms to provide predictable, long-term finance for rearmament, domestic defence industrial bases and reconstruction—tasks that current ad hoc funding mechanisms and national budgets handle unevenly.
The plan arrives amid a flurry of recent EU security pacts and defence linkages: Canada signed a defence and security agreement with the EU last year, the UK struck a similar deal with the EU in May, and Australia opened talks with Brussels in mid-2025. Those moves follow a period of uncertainty among some allies about the steadiness and scope of U.S. support, prompting closer intra-Western cooperation on deterrence and defence supply chains.
Turning the bank from concept to reality faces significant technical and political hurdles. Achieving an AAA rating implies explicit sovereign guarantees or a capital structure backed by large, creditworthy states; investors will seek clarity on governance, lending criteria, arms-export controls and how the bank's lending would comply with NATO, EU and national procurement rules. Political buy-in from a sufficient number of capitals, parliamentary approvals and alignment with existing institutions such as the European Investment Bank and the European Defence Fund will be required.
If established, the bank could accelerate weapons procurement and industrial scaling without relying solely on U.S. financing channels or congressional approvals, potentially reshaping burden-sharing within NATO. But it may also deepen strategic competition by enabling faster European and allied military modernisation, complicate coordination with Washington, and force hard choices about eligibility, conditionality and the balance between grants, loans and guarantees. Over the next months Ottawa will press partners for technical workstreams; observers should watch which governments sign on and how the bank's legal and financial architecture is designed.