The Russian default of August 1998 triggered a global market sell-off and helped lead to the rescue of Long-Term Capital Management.
Russia devalued the ruble, declared a moratorium on some foreign debt payments, and restructured domestic ruble debt on August 17, 1998. Investors had expected the government to defend the currency and repay obligations, so the announcement caused a severe loss of confidence.
The shock spread through emerging markets and developed financial centers. Long-Term Capital Management, a highly leveraged U.S. hedge fund, suffered heavy losses because its trades depended on relationships between markets behaving normally. The Federal Reserve Bank of New York helped organize a private-sector recapitalization in September 1998, rather than directly bailing out the fund with public money.
The event is often called the Russian financial crisis because the default was part of a broader collapse involving currency, debt, and banking problems. It followed the 1997 Asian financial crisis but was not the same event.