Which Russian financial crisis in 1998 included a government default on domestic debt and a sharp devaluation of the ruble?

The 1998 Russian financial crisis included a government default on domestic debt and a sharp devaluation of the ruble.

On August 17, 1998, the Russian government and central bank announced a restructuring of ruble-denominated domestic debt, a temporary moratorium on some foreign debt payments, and a widening of the ruble’s trading band. The ruble subsequently lost much of its value, and the banking sector faced widespread insolvencies.

Russia had been weakened by low oil prices, declining tax revenues, political uncertainty, and the financial aftereffects of the 1997 Asian crisis. The government had relied heavily on short-term treasury bills known as GKOs, making refinancing increasingly difficult. A rescue effort involving the International Monetary Fund and other institutions did not prevent the default.

The crisis also affected global markets. The hedge fund Long-Term Capital Management suffered enormous losses and was later rescued through a private-sector arrangement organized by the Federal Reserve Bank of New York. The Russian event and the LTCM episode are related but are not the same crisis.