If the International Monetary Fund today serves, in effect, as a tough lender of last resort globally, Japan last year gave itself the role of a friendly neighborhood bank in East Asia. That choice has proved timely, but it has become more challenging as the new year began. Unsettling news from two places as far apart as Brazil and South China threatened to scare international lenders and investors away from emerging markets.

The Brazilian government last week was forced to devalue its currency by over 8 percent against the dollar because investors had lost confidence in the government's ability to tackle the country's main problem -- a public-sector deficit that was running last year at 8 percent of that country's gross domestic product. The crisis was provoked largely by the failure to keep the political promise to keep inflation at bay through high interest rates and a stable exchange rate. In China, the Guangdong Trust & Investment Corporation has been forced by the central government to file for bankruptcy: This is China's biggest corporate failure.

A decisive test of Japan's regional economic policy this year is whether it can show results in its efforts to assist Asian countries struggling for economic recovery and restructuring. Of immediate interest is whether Japan's recent financial initiatives can help restart capital flows to Asia, if not to the level of the exuberant past.