Russia defaulted on its domestic debt during the 1998 financial crisis that caused a major stock-market crash.
On August 17, 1998, the Russian government devalued the ruble, declared a 90-day moratorium on some payments by commercial banks, and restructured or defaulted on parts of its domestic debt. The announcement followed weak tax collection, large budget deficits, falling commodity prices, and pressure on the ruble.
Russian financial markets plunged, and the crisis spread internationally through investors and institutions exposed to Russian debt. The failure of the U.S. hedge fund Long-Term Capital Management soon afterward illustrated how interconnected markets had become.
Russia's default was on domestic ruble-denominated obligations, not a simple cancellation of every foreign debt. The crisis also differed from the 1997 Asian financial crisis, though the two episodes were connected through global investor confidence and capital flows.