Which 1998 crisis caused Russia to default on domestic debt and devalue the ruble, triggering a global market shock?

The Russian financial crisis caused Russia to default on domestic debt and devalue the ruble in August 1998.

Russia faced falling commodity revenues, weak tax collection, political instability, and heavy short-term borrowing. The 1997 Asian financial crisis reduced investor appetite for emerging markets and increased pressure on Russian finances. The government tried to defend the ruble while issuing increasingly risky short-term treasury bills.

On August 17, 1998, Russia announced a devaluation of the ruble, a temporary suspension of payments on some domestic debt, and a restructuring of foreign-currency debt. The ruble then lost much of its value, banks failed, and investors around the world retreated from risky assets.

The crisis also helped produce severe losses at the U.S. hedge fund Long-Term Capital Management. The Federal Reserve facilitated a private-sector rescue, but it did not directly bail out the fund.