What was the name of Russia’s 1998 financial crisis, marked by a ruble devaluation and sovereign debt default?

Russia’s 1998 crisis, marked by a ruble devaluation and sovereign debt default, was the 1998 Russian financial crisis.

Russia had struggled with falling tax revenues, weak public finances, and the economic effects of low commodity prices. The government relied heavily on short-term ruble-denominated treasury bills, known as GKOs, to finance its budget.

On August 17, 1998, Russia devalued the ruble, declared a moratorium on some foreign debt payments, and restructured domestic debt. The ruble lost much of its value, banks failed or suspended payments, and the stock market suffered a dramatic decline.

The crisis also damaged the highly leveraged hedge fund Long-Term Capital Management. Its potential collapse led the Federal Reserve Bank of New York to facilitate a private-sector recapitalization in September 1998. Russia’s economy later benefited from recovery in oil prices and improved fiscal conditions.