By analysing the Anglo-German talks about financial compensation for the cost of British troops in West Germany, this article seeks to clarify the linkages between Britain's security and European and monetary policies. The ideological commitment of British politicians to a reserve currency role for sterling had a deep impact on Britain's relations to Europe, particularly the Federal Republic. By consistently threatening to cut its military commitment on the Continent and by minimising it to a question of financial expediency, London failed to draw any political capital from its troops. This became very visible in the field of European integration. The conflict on currency issues and troop deployment was a crucial element in preventing closer relations between the Federal Republic and the United Kingdom in the 1950s and 1960s.