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Bank failures --- Global Financial Crisis, 2008-2009 --- Savings and loan association failures --- Savings and Loan Bailout, 1989-1995 --- History --- History

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Russia had more-or-less completed the privatization of its manufacturing and natural resource sectors by the end of 1997. And in February 1998, the annual inflation rate at last dipped into the single digits. Privatization should have helped with stronger micro-foundations for growth. The conquest of inflation should have cemented macroeconomic credibility, lowered real interest rates, and spurred investment. Instead, Russia suffered a massive public debt-exchange rate-banking crisis just six months later, in August 1998. In showing how this turn of events unfolded, the authors focus on the interaction among Russia's deteriorating fiscal fundamentals, its weak micro-foundations of growth and financial globalization. They argue that the expectation of a large official bailout in the final 10 weeks before the meltdown played an important role, with Russia's external debt increasing by USD 16 billion or 8 percent of post-crisis gross domestic product during this time. The lessons and insights extracted from the 1998 Russian crisis are of general applicability, oil and geopolitics notwithstanding. These include a discussion of when financial globalization might actually hurt and a cutoff in market access might actually help; circumstances in which an official bailout could backfire; and why financial engineering tends to fail when fiscal solvency problems are present.

Access to Finance --- Bailout --- Banking crisis --- Banks & Banking Reform --- Credibility --- Currencies and Exchange Rates --- Currency --- Debt Markets --- Debt obligations --- Emerging market --- Emerging Markets --- Exchange rate --- External debt --- Face value --- Finance and Financial Sector Development --- Globalization --- Gross domestic product --- Inflation --- Inflation rate --- International Bank --- Market access --- Private Sector Development --- Public debt --- Real interest --- Real interest rates --- Repo --- Solvency