Banking on Middle Powers: Canada's New Defence Bank
Back in January, Mark Carney stood at Davos, Switzerland and told the world's elite that the postwar order was effectively over. “We are in the midst of a rupture, not a transition”, describing a world where great powers now treat tariffs as leverage and supply chains as coercion. His message to countries like Canada was blunt: “Middle powers must act together, because if we're not at the table, we're on the menu” (Carney, 2026).
It was a poignant speech; however, talk is cheap. Seven months later, in Ankara, Carney offered something closer to what he had envisioned: a new international bank, headquartered in Canada, built to bankroll the kind of collective defence he had been describing (Prime Minister of Canada, 2026).
The Defence, Security and Resilience Bank (DSRB) aims to expand access to capital, reduce financing costs, and support industrial expansion across member countries by providing low-cost loans and guarantees for defence production (Prime Minister of Canada, 2026). It is targeting up to roughly $134 billion, and is seeking a triple-A credit rating before an operational launch planned for 2027 (Sidhu, 2026). The bank is a direct answer to the problem Carney named at Davos: great powers like the United States and China have the scale to act alone, and a pooled fund is how middle powers can build something comparable.
Members contribute equity capital, which gives the bank a high credit rating and lets it borrow on markets at rates below what individual countries could get, then lend onward to governments and defence firms (Hoffman, 2026). The pitch has drawn real financial-sector interest, with major lenders including JPMorgan, Deutsche Bank, and ING lining up behind the project alongside Canada's largest banks (Mealha, 2026). Because the borrowing sits on the bank's balance sheet rather than any member's, countries can finance military expansion without adding to their national debt. For allies straining to meet NATO's target of 5 percent of GDP by 2035 (NATO, 2026), that off-balance-sheet quality is appealing. This is also why certain countries have chosen not to join. When Britain weighed a roughly £870 million equity contribution to join, its Treasury refused, unwilling to commit nearly a billion pounds during a tight fiscal cycle (The Global Treasurer, 2026).
Nine countries have signed on as founding members: Canada, Albania, Belgium, Greece, Latvia, Luxembourg, Romania, Turkey, and Ukraine (Mealha, 2026). It is a smaller and less influential coalition than organizers had hoped for. Development talks in spring 2026 drew 19 countries, and planners had envisioned a founding membership of up to 40 (Norman, 2026). The lineup is also notable for who is missing: no G7 economy other than Canada has joined as a founding member, and Germany, France, and the United Kingdom, the three largest military spenders in Europe, are absent, with Germany participating only as an observer (Mealha, 2026). The consequences are not just symbolic. The combined GDP of the nine founding members, Canada included, is roughly US$5.75 trillion, barely more than Germany's economy alone at approximately US$5.05 trillion (Norman, 2026). This figure exposes the DSRB's central dilemma: a bank created to help middle powers match the scale of great powers needs the participation of countries with enough economic weight to make that ambition credible. Without broader participation from major European economies, the DSRB risks financing defence production without becoming the strategic institution Carney imagined. Canada's foreign minister has emphasized that membership remains open, and the bank's founding statement frames Ankara as a first step rather than a finished roster.
Not to say the DSRB has already failed. It means the vision Carney set for himself in January is still underway. His argument at Davos was that middle powers could no longer rely on the old order and would need to pool their resources to build institutions capable of operating at a greater scale. The DSRB is the first attempt to turn that argument into something tangible. Seven months in, the result is mixed: nine countries have agreed to build something new, but the absence of Europe's largest defence spenders limits how transformative it can become. Whether the DSRB becomes the counterweight Carney envisioned, or a smaller financing vehicle that never reaches that ambition, remains an open question. Carney built the table. Now the middle powers have to decide whether to take a seat.
References
Carney, M. (2026, January 20). Davos 2026: Special address by Mark Carney, PM of Canada [Speech transcript]. World Economic Forum. https://www.weforum.org/stories/2026/01/davos-2026-special-address-by-mark-carney-prime-minister-of-canada/
Hoffman, C (2026, June 6). Defence finance is getting serious. Trade Treasury Payments. https://tradetreasurypayments.com/articles/defence-finance-is-getting-serious
Mealha, Q. (2026, July 9). A world bank for defence? The lender that Europe's big powers have yet to join. Euronews. https://www.euronews.com/business/2026/07/09/a-world-bank-for-defence-the-lender-that-europes-big-powers-have-yet-to-join
Norman, P. (2026, July 7). Eight countries join Canada in backing defence bank, but major European partners still absent. The Globe and Mail. https://www.theglobeandmail.com/business/article-canada-defence-security-resilience-bank-nine-countries-support/
North Atlantic Treaty Organization [NATO]. (2026, June 29). Defence investment and NATO's 5% commitment. NATO. https://www.nato.int/en/what-we-do/introduction-to-nato/defence-expenditures-and-natos-5-commitment
Prime Minister of Canada. (2026, July 8). Prime Minister Carney secures new defence partnerships at the 2026 NATO Summit [Backgrounder]. https://www.pm.gc.ca/en/news/backgrounders/2026/07/08/prime-minister-carney-secures-new-defence-partnerships-2026-nato
Sidhu, A. (2026, July 9). Banking on NATO: Canada takes lead on the alliance's DSRB. Geopolitical Monitor. https://www.geopoliticalmonitor.com/banking-on-nato-canada-takes-lead-on-the-alliances-dsrb/
The Global Treasurer. (2026, June 16). Why the Treasury nixed the UK's defence bank debut. https://www.theglobaltreasurer.com/2026/06/16/why-the-treasury-nixed-the-uks-defence-bank-debut/