The Russian financial crisis was the 1998 sovereign default and ruble devaluation that helped trigger a worldwide market shock and the rescue of Long-Term Capital Management.
Russia defaulted on parts of its domestic debt and devalued the ruble on August 17, 1998. The announcement damaged confidence in emerging markets and increased investors' fear that other borrowers might fail.
Long-Term Capital Management, a highly leveraged U.S. hedge fund, suffered heavy losses as normally small price differences moved dramatically. The Federal Reserve Bank of New York helped organize a private-sector rescue in September 1998 to reduce the risk of disorderly liquidation.
The episode showed how leverage and interconnected financial markets could transmit a crisis across borders. It followed the 1997 Asian financial crisis, but Russia's default was a distinct event rather than another name for that earlier crisis.