Russia defaulted on much of its domestic government debt during the 1998 financial crisis, triggering a major market shock.
On 17 August 1998, the Russian government devalued the ruble, declared a moratorium on some foreign debt payments, and restructured domestic ruble debt. The measures followed years of fiscal weakness, falling tax revenues, low commodity prices, and pressure from maintaining an exchange-rate band.
Russian financial markets plunged, banks failed, and the ruble lost much of its value. The crisis also damaged international investors and contributed to the collapse of Long-Term Capital Management, a large US hedge fund that had taken highly leveraged positions in global markets.
Russia's episode is often mixed up with the separate 1997 Asian financial crisis, which began in Thailand and spread through several Asian economies. The Russian crisis came later and had its own combination of public-debt, currency, commodity, and banking problems.