Which crisis began after Russia defaulted on domestic ruble debt in August 1998 and triggered worldwide market turmoil?

The Russian financial crisis began after Russia defaulted on domestic ruble debt in August 1998 and triggered worldwide market turmoil.

On August 17, 1998, Russia devalued the ruble, defaulted on parts of its domestic debt, and declared a temporary moratorium on some foreign debt payments. The government faced falling oil prices, weak tax collection, large fiscal problems, and pressure on the currency. Investors rapidly withdrew money from Russian assets.

The shock spread beyond Russia. Global investors reduced risk in emerging and developed markets, and the collapse of the highly leveraged hedge fund Long-Term Capital Management threatened broader financial instability. The U.S. Federal Reserve helped coordinate a private-sector rescue of that fund in September 1998.

This crisis is distinct from the Asian financial crisis, which had begun in 1997 with pressure on Thailand’s baht. The two episodes were connected through international capital flows but were not the same event.