Sept. 7 (Bloomberg) -- The Bank of Japan drained 200 billion yen ($1.7 billion) from the financial system after central banks in the U.S. and Europe yesterday offered extra cash to institutions to help cut the cost of credit.

Japan's rate for overnight call loans between commercial banks and other financial institutions rose to 0.49 percent as of 9:20 a.m. in Tokyo from 0.42 percent yesterday, according to brokerage company Tokyo Tanshi Co. That compares with the central bank's target rate of 0.5 percent.

The European Central Bank left its key interest rate unchanged yesterday after pumping 42.25 billion euros ($57.8 billion) into money markets, providing emergency cash to reduce borrowing costs that reached their highest in six years. The Federal Reserve added $31.25 billion to the U.S. banking system yesterday, the most in almost a month.

The rate Japanese banks charge each other for three-month yen loans, the Tokyo Interbank Offering Rate, yesterday stayed at 0.8425 percent for a third day, the highest since June 1998.

To contact the reporter on this story: Nate Hosoda in Tokyo at nhosoda@bloomberg.net.

Last Updated: September 6, 2007 20:38 EDT