Political Turmoil Exposes Paraguay's Banking Collapse After Ueno Bank Falls
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The collapse of Ueno Bank in Paraguay has unleashed a wave of political upheaval, with Congress removing President Santiago Peña and mass protests demanding accountability from a system that failed ordinary people.
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 accountability from those in power.
Ueno Bank, which had marketed itself as a gleaming 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 rapid downfall of Peña, who had previously assured the public of Ueno's stability, has intensified questions about the credibility and legitimacy of governance in Paraguay.
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 hits local citizens who were left exposed by failed oversight, but also represents a setback to U.S. efforts to strengthen ties in Latin America, as Peña's government had been promoted as a model of stability in the region.