GKO

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For other uses, see GKO (disambiguation).

GKO (or Russian: Gosudarstvennoe Kratkosrochnoe Obyazatelstvo, Государственное краткосрочное обязательство) 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 in 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 ruble first fell about four times, then after some oscillations stopped at that level. See graph of official dollar/ruble 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 ruble'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.