New Delhi: A severe banking crisis in Paraguay has evolved into a major political test for President Santiago Pena following the central bank's intervention in digital lender Ueno Bank. The move has left nearly three million customers unable to access their accounts in a nation of approximately 6.5 million people, sparking widespread public anger and threatening confidence in the broader financial sector.
The fallout has already resulted in the resignation of central bank chief Carlos Carvallo, the detention of eight Ueno executives, and growing calls for President Pena's impeachment. Opposition lawmakers have accused the president of conflicts of interest, misuse of pension funds, and covering up institutional failures related to the crisis.
In the 80-member lower house, 35 lawmakers submitted impeachment articles, requesting an extraordinary session to debate Pena's future. Although the opposition lacks the necessary two-thirds majority to advance the proceedings independently, they have gained backing from several dissident members of the ruling Colorado Party.
President Pena has yet to formally address the impeachment push, though he took to social media to urge political leaders to prioritize depositor protection. He also stated that individuals found responsible for irregularities would face legal consequences without exception.
The crisis erupted when the central bank stepped in after discovering that Ueno had failed to meet baseline solvency requirements. The institution, which expanded rapidly from a boutique fintech firm into a mid-sized lender, is under investigation regarding allegations of excessive lending to companies connected to its controlling entity, Grupo Vazquez.
Pena previously held shares in the Grupo Vazquez conglomerate until March 2025, a connection that has fueled allegations of potential conflicts of interest. Furthermore, Ueno currently manages nearly 850 million dollars in public funds, intensifying the scale of the fallout.
Following pressure from the administration, Central Bank Chief Carvallo resigned from his post. Simultaneously, prosecutors widened their probe, leading to the detention of eight Ueno executives who surrendered to authorities while courts ordered the freezing of their assets. Ueno has not issued a public statement addressing the situation.
The instability has triggered wider concerns regarding public confidence in Paraguay's financial ecosystem, with multiple banking applications experiencing outages. Nevertheless, the Association of Banks of Paraguay reported that commercial lenders are managing an influx of customers transferring accounts away from Ueno and insisted that the national banking network continues to function normally.
The escalating crisis has placed intense pressure on Pena's administration, casting uncertainty over Paraguay's standing as a reliable hub for foreign investment.