With the memories of late-1990s financial crisis still fresh in Japan, the Asia's largest economy is on high alert in the face of a growing global financial turmoil.

However, to combat the crisis is a race against time and a bold risk-taking endeavor. Japan, the world's second largest economy, should first prevent the crisis multiplying domestically. Then, it should take on the responsibility to lead global fight against the crisis.

Jitters are already clearly felt here. Japan heard the alarm after the collapse of Yamato Life Insurance Co., a mid-size firm that invested heavily in real estate investment trust and other high-risk U.S. financial instruments.

Yamato Life attracted customers by offering high returns on policies and tried to meet its liabilities by making high-return, high-risk investments. The financial crisis originated from the United States has made this hazardous strategy unsustainable.

Then it was the repeated free fall on the stock market. The Nikkei dived to its lowest level in more than five years on Oct. 10. Though it rebounded remarkably after the Group of Seven action plan and concerted rate cut across the globe, the market is far from reversing the downward trend.

Japan's economic growth during the past several years was propelled by strong exports. However, gloomy earnings prospect of leading exporters against the backdrop of a stronger yen and a global economic downturn has led investors to dump bluechips in key export industries such as automotive and electronics.

To eradicate current crisis, Japan should draw something from the past. About 10 years ago, measures taken by Japan to ward off financial crisis included temporary nationalization of banks, insuring the full value of deposits, and government guarantees of interbank capital transactions.

However, the legacies from that financial crisis are wearing off. A law authorizing the government to inject public money into smaller lenders to boost their capital bases expired at the end of march this year. A program for public support to life insurance firms will also expire next March.

Realizing the extent of the ongoing financial crisis, both Japan's ruling bloc and the opposition parties are considering measures to deal with the crisis, including the renewal of the law and an extension of the program.

But there are more Japan should do than just to restore its old methods. For example, freezing the sale of government-held stocks to stabilize stock market. Or it could even try investment tax cuts to boost real economy.

As the country holding the G-8 presidency this year and the least affected member country, Japan should also try to lead international cooperation to untangle this crisis.

Japanese financial houses were rapid to play a role. Nomura Holding Inc. agreed to take over Lehman Brothers' core operations in Asia, Europe and the Middle East, and Mitsubishi UFJ Financial Group Inc. announced to invest in Morgan Stanley soon after the crisis escalated.

The Bank of Japan has pumped emergency money for record straight business days to facilitate interbank funding. It also proposed the United States and European countries to use public funds to stem the crisis.

Japanese leaders should consider how to live up to the world's expectation on Japan to share its experience and find a shortcut to walk out of the mess, with the precondition of maintaining financially sound and intact at home.

(Xinhua News Agency October 23, 2008)