Paraguay's Stability Shaken After Ueno Bank Collapse Sparks Political Crisis
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The collapse of Ueno Bank in Paraguay has fueled political turmoil, with Congress removing President Santiago Peña and protesters demanding accountability as the nation faces the consequences of a banking disaster.
The recent collapse of Ueno Bank in Paraguay has triggered a political crisis, culminating in Congress removing President Santiago Peña. Following the bank's insolvency, which left many citizens locked out of their accounts, protests erupted across the country demanding answers and swift action.
Ueno Bank, which had positioned itself as a digital success story, was seized by regulators after concerns about its lending practices came to light. The bank's controlling shareholder, Miguel Vázquez, is now in jail, and the central bank's director has resigned. The sudden downfall of Peña, who had previously assured the public of Ueno's stability, has raised serious questions about the future of governance in Paraguay and the cost of institutional failure.
The Inter-American Development Bank’s investment arm had previously identified red flags during a visit to Ueno in 2025, but proceeded to loan nearly $20 million to the bank in 2024. The situation escalated quickly, with the Senate voting to replace Peña with Vice President Pedro Alliana amid a backdrop of protests and police presence at Peña's residence.
Alliana has called for immediate reimbursement of Ueno account holders, particularly those most vulnerable, as the fallout from the bank's closure continues to affect over a million Paraguayans who had opened accounts there. The scandal not only impacts local citizens but also poses a setback to U.S. efforts to strengthen ties in Latin America, as Peña's government was previously viewed as a model of stability in the region.