After the fall of the Berlin Wall, Moscow began, slowly, its move towards what some might call a free market, though more aptly represents monopoly capitalism. Yeltsin, amidst furious opposition, moved to start the privatisation process in the land market in the early 1990's, backed finally by the Duma in 2001, ably supported by the World Bank. Mikhail Gorbechev had already pronounced commercial banks legal way back in 1988. Banks cannot create their credit effectively without a government granted license in land.
New Russian power centres formed quickly, built on the two newly created government granted privileges, banking and natural resource (land) companies, the rent of which the government gave away at fire-sale prices. This is where Russia's recent capitalist barons come from, as does their wealth.
Unexpectedly, Russia defaulted on its bond payments in the summer of 1998, late August. The collapse of the market exposed the strategies of the highly leveraged Long Term Capital Management (LTCM) hedge fund, which had been attempting to exploit such bond markets for profit. For every $5 dollars of their own capital, the fund had borrowed $50 from banks and was now exposed to derivative positions of nearly $2 trillion. The Basle Committee of Banking Supervisors reported a couple of months later that "banks and securities houses had compromised credit standards in their eagerness to do business with the fund." The Fed bailed them out anyway, restraining interest rates from going any higher in the US to help with the process. Coming right after the Asian economic flu, interest rates in the US stayed lower than they otherwise might have, leaving credit conditions that much easier for bubble conditions to form in the NASDAQ, as the Fed fought the economic fires elsewhere.
As a result of all the chaos in currency markets in late 1998 from the Russian bond default and LTCM farce, the Group of Seven (G7) leading economic nations set up a new body, the Financial Stability Forum in an effort to anticipate future financial market crises.
Banks blinded by Hedge Fund: Report, Australian Financial Review, February 1, 1999, page 26.
(It might be noted, Russia's currency market suffered a 25 percent 'collapse' one afternoon in October of 1994. This was 45 months prior to the bond default of 1998.)