Tightening monetary policy is a macroeconomic policy, which aims to reduce the amount of money circulating in the market by controlling the money supply, raising interest rates and tightening credit conditions, so as to reduce inflation, stabilize prices, curb investment and consumer demand, and finally achieve economic stability and sustainable growth.

Tight monetary policy is usually implemented under the following circumstances:

1. Serious inflation: When the inflation rate is too high, prices continue to rise, affecting people's living standards and social stability. By implementing a tight monetary policy, the currency circulation in the market can be reduced and the inflationary pressure can be alleviated.

2. Economic overheating: When the economic growth is too fast and the investment and consumption demand are excessively inflated, it may lead to problems such as resource shortage and overcapacity. The implementation of tight monetary policy can reduce investment and consumption demand and alleviate economic overheating.

3. Asset bubble: When asset prices (such as stock market and property market) rise sharply and form a bubble, it may lead to an increase in financial market risks. The implementation of tight monetary policy can curb asset price bubbles and reduce financial risks.

The main means of tight monetary policy include:

1. interest rate increase: by raising the deposit reserve ratio, rediscount interest rate, benchmark interest rate and other means, the capital cost of financial institutions will be raised, and then the loan cost of enterprises and individuals will be raised, thus curbing the loan demand and investment demand.

2. Control the money supply: reduce the money supply in the market and slow down the speed of money circulation by means of open market operation and adjustment of the statutory deposit reserve ratio, so as to curb inflation.

3. Tightening credit conditions: raising loan approval standards and strengthening supervision of loan use. , limiting the loan ability of enterprises and individuals, thus reducing investment and consumer demand.

It should be noted that tight monetary policy has played a positive role in dealing with economic problems, but if it is not properly implemented, it may lead to economic recession, enterprise closure and rising unemployment rate. Therefore, when implementing tight monetary policy, the government needs to comprehensively evaluate the economic situation and formulate appropriate policy strength and rhythm to ensure economic stability and sustainable development.