At a Glance
President Santiago Peña was impeached and arrested following the collapse of digital lender Ueno.
Nearly 3 million customers temporarily lost access to their savings.
Ueno held around $850 million in public funds, including state pension money.
Authorities have begun repaying depositors, with $160 million already distributed.
The failure of one of Paraguay’s most popular digital banks has triggered a political earthquake, raising fresh questions about financial oversight and investor confidence.
Paraguay’s digital banking success story has turned into a national crisis. The collapse of Ueno froze millions of customer accounts, sparked public protests, and ultimately cost President Santiago Peña his office.
Within five days, a banking crisis had escalated into one of the country's biggest political scandals in more than a decade.
KEY DETAILS
On Friday, Peña was impeached after attempting to resign, and Vice President Pedro Alliana was sworn in as his replacement. Authorities subsequently arrested Peña and charged him with breach of trust and administration for personal gain. He has denied wrongdoing and pleaded not guilty.
Central bank chief Carlos Carvallo, who previously led Ueno, also resigned and faces charges including breach of trust, producing false public documents and administration for personal gain.
Launched in 2021, Ueno rapidly attracted customers by offering accessible digital banking. Nearly half of Paraguay's 6.5 million population opened accounts with the lender.
However, leaked regulatory reports raised concerns about excessive lending to certain companies. On Tuesday, the central bank placed Ueno into resolution after finding that it had breached minimum solvency requirements.
As of June, public institutions held approximately $850 million with the bank. The central bank says $160 million has already been paid to nearly 1.2 million savers under the deposit guarantee scheme.
WHAT TO WATCH NEXT
Markets will be watching the repayment process, legal proceedings against former officials, and whether the crisis spreads to other parts of Paraguay's financial system.
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Source: Reuters
Time: 10: 00 AM EEST
