The bank of Japan drained up to 1.6 trillion yen in cash from its financial markets on Tuesday, suggesting that the Bank of Japan felt comfortable that business was returning to normal.

Japan's central bank initially took out 600 billion yen from circulation on Tuesday after injecting 600 billion yen on Monday and 1 trillion yen on Friday. The bank decided to drain cash after a radical decline of the overnight call rate, which fell as low as 0.06 percent.

The percentage was well below the BOJ's target rate of 0.50 percent. If the call rate had declined too much, it would have meant excess liquidity of the money system.

After the liquidity didn't seem to be a problem following the withdrawal of 600 billion, the central bank decided to drain 1 trillion cash more again. As a result, the call rate increased to 0.20 percent, showing that the system has tightened to some extent.

Japan