What was the name of the 1998 hedge fund collapse that threatened the global financial system?

The 1998 hedge fund collapse that threatened the global financial system was Long-Term Capital Management.

Long-Term Capital Management, or LTCM, was founded in 1994 and employed prominent financial experts, including Nobel Prize-winning economists Myron Scholes and Robert Merton. It used highly leveraged trading strategies based partly on the assumption that price differences would converge.

The Russian government’s August 1998 debt default and the resulting market turmoil caused many positions to move against the fund. Because LTCM had borrowed heavily and traded with numerous major institutions, its disorderly failure could have spread losses through the financial system.

The Federal Reserve Bank of New York organized a private-sector rescue in September 1998. The central bank did not directly provide the bailout money, but it helped coordinate participating banks. LTCM did not technically cause a stock-market crash; it represented a dangerous amplification of global market stress.