Bank failure triggers state crisis in Paraguay - millions of people fear for their money

In Paraguay, the virtual bankruptcy of a digital bank has triggered a financial and political crisis. While millions of citizens fear for their savings, parts of the opposition are preparing impeachment proceedings against President Santiago Peña. He, in turn, urged central bank chief Carlos Carvallo to resign.

The digital bank Ueno is at the center of the scandal in the South American country. The central bank initiated resolution proceedings against them after the financial institution's equity ratio fell below 50 percent of the prescribed minimum value.

Central bank chief Carvallo had to resign himself because he was accused of a conflict of interest due to his previous managerial position at the digital bank.

According to its own information, Ueno Bank had 2.8 million customers in the first quarter of this year, which would be around 60 percent of the country's adult population. It is one of the largest banks in Paraguay. Ueno also manages $800 million to $850 million in public funds. Pension payments were also processed through the bank's currently frozen accounts.

With no access to their bank app accounts or ATM withdrawals, frightened customers gathered outside closed branches across the country. Corresponding video recordings circulated in the X news service, among others. They demanded information about the whereabouts of their savings while the police kept watch on site. There have already been street protests in the capital Asunción.

Head of State Peña tried to calm the population via video. He will introduce a law “that gives every saver back what they are entitled to as quickly as possible”.

Representatives in Congress are preparing impeachment proceedings against Peña. This is about his own previous business relationships with “Grupo Vázquez”, to which Ueno Bank belonged.