Russia's 1998 default triggered a major stock-market shock and a global hedge-fund crisis.
On August 17, 1998, the Russian government devalued the ruble, declared a moratorium on some foreign debt payments, and announced a restructuring of domestic debt. The measures followed years of fiscal pressure, low tax collection, falling commodity revenues, and the wider instability associated with the Asian financial crisis.
Russian financial markets suffered heavily. The crisis also damaged confidence in emerging markets and helped create severe losses for Long-Term Capital Management, a highly leveraged U.S. hedge fund. The Federal Reserve facilitated a private-sector rescue of the fund to reduce the risk of broader market disruption.
The event is often summarized as a Russian stock-market crash, but the key trigger was a sovereign debt and currency crisis. Russia's default was distinct from Argentina's later 2001 default and from the Asian financial crisis that preceded it.