One App, Five Days, One Toppled President: Inside Paraguay’s Banking Meltdown

At a Glance

• Digital bank Ueno was put into resolution on Tuesday, freezing accounts for nearly 3 million customers
• President Santiago Peña was impeached Friday, and Vice President Pedro Alliana took over
• Peña and ex-central bank chief Carlos Carvallo face breach of trust charges
• Ueno held roughly $850 million in public funds as of June

One bank failure has driven Paraguay into its deepest political crisis in over a decade and shaken its image as a stable place to invest.

Ueno put roughly half of Paraguay’s people into banking, many for the first time. This week it collapsed in just five days, and the president fell with it.

Key Details

On Tuesday, the central bank put ueno into resolution, its strongest step short of immediate liquidation, after finding the bank had breached minimum solvency requirements. Accounts for nearly 3 million customers, in a country of 6.5 million, were temporarily locked. Earlier, leaked regulatory reports had warned of excessive lending to certain companies.

On Friday evening, Peña was impeached after trying to resign. Authorities arrested him, and prosecutors charged him Saturday with breach of trust and administration for personal gain. A judge ordered pretrial detention at a military facility. Peña denies wrongdoing and has pleaded not guilty.

Peña was a business partner of ueno’s owner group until March 2025. After winning the 2023 election, he named ueno’s former president, Carvallo, to run the central bank. Carvallo resigned and was charged with breach of trust, producing false public documents and administration for personal gain. A judge approved his pretrial detention.

Market Reaction

Authorities say the crisis is limited to Ueno and promise depositors will be reimbursed. The central bank reports $160 million has already gone to nearly 1.2 million savers through the state deposit guarantee scheme.

Why It Matters

Public institutions, including the state pension fund, held about $850 million at Ueno. Analysts warn the hit to Paraguay’s reputation in South America could last far longer than the bank resolution itself.

Watch the court cases, the pace of depositor payouts, and how Alliana’s government handles the fallout.

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Source: Reuters