European Union finance ministers agreed on Friday to allow the European Investment Bank (EIB) to invest more in the defence and security sector.
The EIB has strict regulations for spending in the defence and security industry, which ministers want to change.
A large part of the reforms involve updating the definition of so-called dual-use goods - products that can be used for both civil and military purposes - such as helicopters or drones.
Now, the EIB is to waive the requirement that dual-use projects derive more than 50% of their predicted revenues from civilian use, a statement from the investment bank said.
However, there are concerns that the move could harm the bank's good credit rating, as it may result in higher financing costs.
EIB President Nadia Calviño said the bank, as the "financial arm of the EU," must contribute to securing the bloc's security.
This will be achieved while protecting the EIB's finances and upholding the bank's environmental, social and corporate governance (ESG) ratings, she said.
ESG ratings assess to what extent a financial institution's activities impact the environment, the climate and social issues - and conversely, how these factors influence the financial institution's business.
The EIB is also to update rules for financing small and medium enterprises (SMEs) in the defence sector.
EU Trade Commissioner Valdis Dombrovskis said "greater EIB investment in this area will also send a positive signal to the markets" in a press conference after the decision.