The crisis began on Tuesday when the Central Bank of Paraguay placed Ueno Bank into resolution, the strongest regulatory action short of liquidation, after determining its solvency ratio had dropped below half the legal requirement. This intervention froze the accounts of approximately three million customers, representing roughly 60 percent of Paraguay’s adult population. The immediate commercial consequence was severe: long lines formed outside branches in the capital, Asunción, as depositors attempted to withdraw funds from rival banks, while thousands took to the streets in protests that occasionally turned violent, with police deploying tear gas and water cannons.
Investigations allege that Peña used his political influence to direct hundreds of millions of dollars in public funds into Ueno while shielding the institution from regulatory scrutiny regarding risky insider lending practices. Specifically, prosecutors point to the placement of $355 million from the state pension fund at Ueno, a figure exceeding the legal limit, and Peña’s 2023 appointment of Carlos Carvallo, a former Ueno executive, as head of the Central Bank. Carvallo has also been charged with breach of trust, administration for personal gain, and falsifying government documents, and was ordered into pretrial detention alongside Peña. The bank had grown rapidly after receiving a full banking license in 2023, utilizing cashback incentives and a network of over 70 branches to attract customers.
Peña, a former IMF economist and member of the ruling Colorado Party, had offered to resign on Thursday. However, lawmakers rejected his resignation, opting instead for impeachment to strip him of the legal immunity granted to former presidents. The Senate voted 44-0 to remove him from office, with one senator absent. Pedro Alliana, the deputy president, has been sworn in as interim president and pledged to fully compensate the millions of affected compatriots. Peña faces up to 20 years in prison if convicted. The next phase involves the ongoing criminal investigation, with prosecutors seeking to freeze Peña’s assets and continue questioning regarding the management of the bank’s public funds.
