tight money

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Tight money

When a restricted money supply makes credit difficult to secure. The antithesis of tight money is easy money.

Tight Money

A situation in which it is difficult to receive credit because of the monetary policy of the central bank. Tight money occurs when the central bank has enacted relatively high target interest rates. While this usually happens when the central bank is seeking to control or is concerned about inflation, tight money can negatively impact security prices and make it hard to receive a loan for a house or business.

tight money

A condition of the money supply in which credit is restricted and interest rates, consequently, are relatively high. Tight money generally has a negative effect on security prices, at least in the short run. Compare easy money.

tight money

or

dear money

a government policy whereby the CENTRAL BANK is authorized to sell government BONDS on the open market to facilitate a decrease in t he MONEY SUPPLY (see MONETARY POLICY).

The decrease in money supply serves to increase INTEREST RATES, which discourages INVESTMENT because previously profitable investments become unprofitable owing to the increased cost of borrowing (see MARGINAL EFFICIENCY OF CAPITAL

INVESTMENT).

Tight money policy, through MONEY SUPPLY/SPENDING LINKAGES, reduces AGGREGATE DEMAND. Contrast CHEAP MONEY.

References in periodicals archive ?
Security will be tightened as transaction values increase.
This nonsurgical skin-tightening procedure uses radio waves to tighten facial skin and smooth wrinkles.
Many institutional investors--prime funds, collateralized loan obligations (CLOs), hedge funds, etc.--have never managed portfolios of loans through a credit cycle trough, and the jury is out as to how they will act when credit tightens. These institutional sources require liquidity in the debt paper, and as a result, the trading of loans has expanded rapidly.
Maximum Loan-to-Value Guidelines for Banks and Thrifts Raw land loans 65% Land development loans 75% Multifamily and commercial construction 80% 1-4 family residential construction 85% These guidelines, established by regulators in 1993, are getting renewed attention as lenders tighten their standards on loans to business.
"For example, it doesn't recognize if the bolt is the wrong size, if it hasn't been hardened, if it has crossed threads, or if it is going in crooked and is jammed in the hole." Hence, the ultrasonic subsystem is hooked into a fourth channel on a torque-turn-tension microprocessor-based subsystem, developed by GSE, that tightens to torque, torque angle, or the yield point.
The government of New Zealand has said that it has tightened trust laws following the Panama Papers disclosure.
Hungary's central bank has tightened its collateral rules.
The banking watchdog in Europe has tightened its rules covering Internet payment services.
The central bank of Singapore has announced that it has tightened capital and credit rules.
The central bank of Peru has tightened reserves for the fourth time this year.
The central bank of Singapore has tightened its currency policy.