In the summer of 1998, Russia’s ruble lost two thirds of its value in less than a month. The groundwork was years of deficits: the first Chechen War cost close to $30 million a day in early 1995 and an estimated $5.5 billion by 1996, pushing the budget deficit to nearly 10 percent of GDP. The central bank held the ruble in a band of 5.3 to 7.1 per dollar, spending reserves to defend it. Then the 1997 Asian financial crisis drove investors out of emerging markets, and prices for crude oil and non-ferrous metals fell.

In March 1998 Boris Yeltsin fired Prime Minister Viktor Chernomyrdin and the entire cabinet and installed 35-year-old energy minister Sergei Kiriyenko. GKO rates hit 150 percent, and a $22.6 billion IMF and World Bank package in July failed to hold. On August 17 the government devalued the ruble, defaulted on domestic debt and froze foreign debt payments for 90 days. By September the rate reached 21 rubles per dollar and inflation hit 84 percent. Yevgeny Primakov became prime minister, and rising oil prices, import substitution and a barter economy fed a fast recovery.

• By May 1998 unpaid wages reached $12.5 billion, and striking coal miners blocked the Trans-Siberian Railway.
• About $5 billion of the IMF and World Bank loans was allegedly stolen on arrival.
• The central bank spent $27 billion defending the ruble between October 1997 and August 1998.
• Bankers Trust took such heavy losses on Russian bonds that it was acquired by Deutsche Bank for $10 billion.
• Ukraine and Moldova defaulted in the aftermath, and Romania privatized its first state bank.