Tightening monetary policy is a policy tool adopted by the central bank to achieve macroeconomic goals. This monetary policy is a tight monetary policy when the economy is overheated, the total demand is greater than the total supply, and the economy is experiencing inflation. The central bank will adopt a tight monetary policy and raise interest rates by controlling the money supply, thus reducing investment and demand. The decline in aggregate demand will balance aggregate supply and aggregate demand and reduce the inflation rate.

The main measures to implement monetary policy include seven aspects:

1. Reduce currency issuance. The effect of this measure is that the number of original banknotes will not increase. The central bank can grasp the source of funds as the basis for controlling the credit activities of commercial banks. The central bank can use the right to issue money to regulate the money supply.

2. Control and standardize government loans. In order to prevent the government from abusing loans to fuel inflation, capitalist countries generally stipulate that short-term loans are limited and must be paid off when taxes or debts are fully recovered.

3. Open market business. Through its open market business, the central bank plays a role in regulating the money supply, expanding or tightening bank credit, and then regulating the economy. A common measure is to issue government bonds in the open market. More and more people buy government bonds, but there is less and less capital flow in the market.

4. Raise the deposit reserve ratio and raise the deposit reserve ratio. The central bank controls the loans of commercial banks by adjusting the reserve ratio and affects the credit activities of commercial banks. Deposit reserve refers to the deposit prepared by financial institutions in the central bank to ensure the needs of customers to withdraw deposits and settle funds. The ratio of the deposit reserve required by the central bank to its total deposit is the deposit reserve ratio. It is a fund prepared to limit the credit expansion of financial institutions and ensure that customers withdraw deposits and liquidate funds.

5. Raise the rediscount rate, which is a discount between commercial banks and the central bank. Adjusting the rediscount rate can control and adjust the credit scale and affect the money supply.

6. Selective credit control refers to the special management of specific objects, including securities trading credit management, consumer credit management and real estate credit management.

7. Direct credit control refers to the measures taken by the central bank to directly intervene and control the credit activities of commercial banks.