Which 1998 Russian financial crisis triggered a global stock-market sell-off after the government defaulted on domestic debt?

The Russian financial crisis was the 1998 crisis in which Russia defaulted on domestic debt and triggered a global stock-market sell-off.

Russia faced falling commodity prices, weak tax collection, political instability, and heavy short-term borrowing. On August 17, 1998, the government devalued the ruble, declared a moratorium on some foreign debt payments, and restructured domestic debt.

The shock spread through international markets. Investors reduced exposure to emerging markets, while banks and hedge funds faced losses on Russian positions. The failure of Long-Term Capital Management, a highly leveraged U.S. hedge fund, soon threatened wider financial instability and led to a private-sector rescue coordinated by the Federal Reserve Bank of New York.

The Russian crisis is not the same as the 1997 Asian financial crisis. Asia’s turmoil began with Thailand’s baht devaluation, whereas Russia’s crisis centered on sovereign default, currency devaluation, and domestic debt restructuring.