The Arrow of Red Dragon Slaying is, like it's name implies, an arrow that is particularly effective at harming (or even killing) dragons. It appears to be equally effective at slaying dragons regardless of scale coloration. It's particularly feared by adult dragons who can actually be slayed by it.
Dunkelzahn bequested in his will the arrow to anyone that was able to report to Lofwyr about the contents of room 429 in the Berlin Saeder-Krupp offices. It is believed no one claimed the arrow before its disappearance, though it could have also been returned to the Draco Foundations for reasons unknown.
It is unknown if this item is at all tied to the Banner of the Red Dragon.