As a multilateral bank, the Defence, Security, and Resilience Bank (DSR Bank) is intended to enable the securing and rapid adaptation of critical supply chains, and at the same time offer states long-term, favourable financing for defence investments – supported by an AAA credit rating. We are currently in advanced talks with all relevant decision makers from the European member states, and the EU. The concept has met with broad approval at a political and professional level. The first steps towards its establishment – such as the formation of a group of founding states and charter negotiations – have been initiated. The next milestones include the adoption of the Bank Charter, which is due to take place at the NATO Summit in The Hague at the end of June.

DSR Bank will provide capital through its own AAA-rated bonds at favourable conditions, and facilitate the financing of companies in the defence industry through guarantees to credit providers. Small and medium-sized suppliers and defence tech start-ups in particular will benefit from this. With the guarantee capability already anchored in the founding treaty, it solves the central political challenge: the rapid adaptation of European supply chains through the mobilisation of short-term working capital. From a national budget management perspective, deposits in the bank are considered assets and not liabilities, which does not increase public debt – a significant advantage in times of high and increasing public debt.

Indeed it is. The DSR Bank also provides leverage for joint procurement, strengthens the industrial base in all member states, and can promote the interoperability of defence systems and political unity within the NATO and Indo-Pacific alliances through appropriate credit criteria.

Against the backdrop of the ongoing Russian war of aggression in Ukraine and other geopolitical shifts, it is to be welcomed that various concepts and ideas for strengthening our defence capacities are currently being discussed and examined – this brings us forward in the discussion overall. The great advantage of the DSR Bank over other European entities lies in its structural simplicity: in order to function quickly as an effective instrument for strengthening the efficiency of European supply chains, initially only a few national governments are required to establish it and there is no need to raise private capital. Furthermore, the DSR Bank does not pursue a purely EU-centred approach like other concepts, and aims to achieve the full participation of non-EU states such as the UK, USA, Canada, South Korea, Japan or Australia in the long term, which would significantly increase its impact and financial strength.

The EIB and similar institutions have so far not specialised in defence, which makes the adaptation of governance and the acceptance of arms financing complex and politicised; moreover, it lacks the flexibility of an independent mandate, which the DSR Bank provides.

DSR Bank will be subject to the same regulatory and behavioural compliance requirements that apply to any global bank. However, due to its global nature, we expect that it will ultimately need to comply with Basel, EBA/ESMS and FCA regulations and standards.

Operationally, it needs strong risk management with clear credit guidelines, due diligence processes and independent control bodies to prevent misallocations. The use of first loss positions to leverage private capital in particular makes sense, but requires risks to be strictly monitored and controlled.

The DSR Bank's initial focus is on strengthening European defence. This already extends beyond the borders of the EU – take the UK, for example. The long-term plan is to gain a broad alliance of transatlantic and Indo-Pacific countries – including the USA – which are necessary to truly establish the bank as a global institution. What is clear, however, is that any country that wishes to participate will have to abide by the rules laid down by the founding members in the charter document.

This will ultimately depend on where the bank's headquarters will be located – something that will be discussed as part of the political decision-making process.