Which Russian government action helped trigger the 1998 global market crisis?

Russia’s debt default helped trigger the 1998 global market crisis.

On August 17, 1998, the Russian government devalued the ruble, declared a moratorium on some foreign debt payments, and restructured domestic ruble debt. The announcement shocked investors already worried about Russia’s fiscal position, weak tax collection, falling commodity prices, and the costs of the Chechen War.

The crisis spread through banks and international markets. Russian banks faced severe pressure, while investors pulled money from emerging markets. The turmoil also damaged Long-Term Capital Management, a highly leveraged U.S. hedge fund whose positions were linked to many markets. The Federal Reserve Bank of New York helped arrange a private-sector recapitalization, rather than a government bailout of the fund.

Russia eventually stabilized after the ruble’s depreciation and later benefited from higher oil prices. The crisis is commonly called the Russian financial crisis of 1998, while its international effects are often discussed alongside the collapse of LTCM.