Which Russian financial instrument defaulted during the 1998 Russian financial crisis?

Russia defaulted on its domestic government bonds during the 1998 Russian financial crisis.

On August 17, 1998, the Russian government and central bank announced a restructuring and effective default on ruble-denominated domestic debt, while also widening the ruble’s trading band and later allowing the currency to depreciate sharply. The securities are commonly known by the Russian acronym GKO, referring to short-term government bonds.

The crisis followed years of fiscal weakness, falling commodity revenues, political uncertainty, and pressure on Russia’s exchange-rate system. The government had relied heavily on short-term borrowing, creating a dangerous refinancing burden. When investors lost confidence, yields rose and the state struggled to roll over debt. The ruble’s collapse and the debt default damaged Russian banks and investors and contributed to losses for international funds. This episode is distinct from the 1998 collapse of Long-Term Capital Management, although that hedge fund’s problems were partly linked to the Russian default and heightened global market stress.