Russian debt default has significant financial costs

History repeating?

As the Russian invasion of Ukraine enters a second month, Russia is now at serious risk of defaulting on its debt.

It has been 24 years since the country's last rouble-based default, which triggered a crisis that shocked the financial world. The rouble collapsed, inflation in Russia hit 86% and more broadly, the default contributed to the failure of a number of highly leveraged hedge funds. Perhaps most significantly though, the crisis also ushered in the resignation of Boris Yeltsin and the succession of his prime minister, Vladimir Putin. The sanctions imposed on Russia over the invasion of Ukraine risks not only a rouble-based default, but also a foreign currency default. The last time this happen...