In spectral theory, j-monotonic families of 2 × 2 matrix functions appear as transfer matrices of many one-dimensional operators. We present a general theory of such families, in the perspective of canonical systems in Arov gauge. This system resembles a continuum version of the Schur algorithm, and allows to restore an arbitrary Schur function along the flow of associated boundary values at infinity. In addition to results in Arov gauge, this provides a gauge-independent perspective on the Krein–de Branges formula and the reflectionless property of right limits on the absolutely continuous spectrum. This work has applications to inverse spectral problems which have better behavior with respect to a normalization at an internal point of the resolvent domain.