GKO

For other uses, see GKO (disambiguation)}}}.

GKO (or Russian: ) is an acronym for the notorious short-term state bonds issued by the state of Russia since February 1993. The literal translation of the term is "state short-term obligation".

The acronym became synonymous with the Russian financial crisis of 1998 when the state defaulted on its "GKO obligations" (bonds). The GKO crisis was a most significant financial crisis in post-independence Russia and caused frenzy among foreign and domestic investors and creditors. The crisis lead to abrupt devaluation of the Russian ruble more than twice. (In fact, the rouble first fell about four times, then after some oscillations stopped at that level. See [graph of official dollar/rouble rate for 1998-1999]. See also [more detailed graph for 08-09/1998]. Note that actual exchange rate could be different from official rate.) The crisis severely undermined confidence in the rouble's stability, although such dramatic drops have not happened again.

Prior to the crisis, the GKO issuance policy closely resembled those of pyramid schemes or Ponzi schemes, with the interest on matured obligations being paid off using the proceeds of newly issued obligations.

GKO-OFZ today

After 1998 a new series of state bonds was issued. Today, they are called GKO-OFZ.

External links

[Overturned Pyramid], a Moscow News article
[Current volume of GKO-OFZ market] at the Bank of Russia website (in English)

From Wikipedia, the Free Encyclopedia. Original article here. Support Wikipedia by contributing or donating.
All text is available under the terms of the GNU Free Documentation License See Wikipedia Copyrights for details.