Russia’s exceptional default on its own-currency debt triggered the 1998 crisis

Evidence

If the liquidation of Salomon’s arbitrage positions was a background factor in the problems of the summer of 1998, the immediate cause of the 1998 crisis was, as noted above, Russia’s August 17 default on its ruble-denominated debt. That Russia was in economic trouble was no surprise: what was shocking was that it (unlike previous debtor governments) should default on debt denominated in domestic currency. — Donald MacKenzie, An Engine, Not a Camera, 1035

Categorization

• XREF: Connects to the broader 1998 LTCM crisis narrative — the reader’s intermediate finance background will link this to standard accounts of the Russian default’s role. — connects to: Russia’s August 1998 default triggered a global flight to quality in financial markets. — Donald MacKenzie, An Engine, Not a Camera: How Financial…, 1013; The ruble devaluation and bank moratorium turned Russia’s default into a cascading loss event — Donald MacKenzie, An Engine, Not a Camera: How Financial…, 1038; A sovereign currency makes a state incapable of defaulting on its own obligations

Broader Connections

• The ruble devaluation and bank moratorium turned Russia’s default into a cascading loss event #expands (0.85) — Donald MacKenzie, An Engine, Not a Camera, 1038
• A sovereign currency makes a state incapable of defaulting on its own obligations #qualifies (0.80)