Which 1998 event caused Russia to default on domestic debt and helped trigger a global hedge-fund crisis?

The 1998 Russian financial crisis caused Russia to default on domestic debt and helped trigger a global hedge-fund crisis.

Russia’s government announced a de facto devaluation of the ruble, a restructuring of domestic ruble debt, and a temporary moratorium on some foreign debt payments in August 1998. The crisis followed weak tax collection, falling commodity revenues, political uncertainty, and pressure from the broader Asian financial crisis.

The shock severely damaged Russian banks and businesses. It also threatened the highly leveraged hedge fund Long-Term Capital Management, whose positions were exposed to turmoil in global bond and currency markets. The Federal Reserve helped organize a private-sector rescue to limit wider financial disruption.

The Russian crisis is distinct from the 1997 Asian financial crisis and from later sovereign debt crises in Latin America. Its effects were international because investors were already reducing risk across emerging and developed markets.