Russia's 1998 debt default helped trigger a global market shock.
On August 17, 1998, the Russian government devalued the ruble, declared a moratorium on some foreign debt payments, and restructured domestic debt. Falling oil prices, weak tax collection, political instability, and the financial damage left by the Asian crisis had made Russia's fiscal position increasingly fragile.
The default damaged confidence in emerging markets and contributed to severe stress at Long-Term Capital Management, a highly leveraged hedge fund. Because major banks had exposure to the fund and feared wider contagion, the Federal Reserve Bank of New York helped arrange a private-sector recapitalization in September 1998.
Russia's event is often called a sovereign default, but it also produced a currency crisis and stock-market collapse. It should not be confused with Argentina's 2001 default or Mexico's 1994 peso crisis, which occurred in different countries and years.