A Rules of the Game(1) o The reactions of central banks to gold flows across their borders furnished another mechanism to help restore balance of payment equilibrium Central banks that were persistently losing gold were motivated to contract their domestic asset holding, pushing domestic interest rates upward and attracting inflows of capital from abroad Central banks gaining gold had much weaker incentives to eliminate their own imports of the metals. The main incentive was the greater profitability of interest-bearing domestic assets compared withbarfen gold.Rules of the Game (1) The reactions of central banks to gold flows across their borders furnished another mechanism to help restore balance of payment equilibrium. Central banks that were persistently losing gold were motivated to contract their domestic asset holding, pushing domestic interest rates upward and attracting inflows of capital from abroad. Central banks gaining gold had much weaker incentives to eliminate their own imports of the metals. The main incentive was the greater profitability of interest-bearing domestic assets compared with “barren” gold