Paraguay's political crisis deepened on Wednesday, November 4, as opposition lawmakers filed impeachment articles against President Santiago Peña over the collapse of the digital lender ueno, a bank failure that has left roughly 3 million customers — in a country of 6.5 million people — unable to access their accounts, Reuters reported from Asunción.

Source: Reuters

Thirty-five lawmakers submitted the impeachment articles in the 80-seat Chamber of Deputies on Wednesday and asked congressional leaders to convene an extraordinary session on Thursday to debate Peña's future. The filing also names Vice President Pedro Alliana. Opposition lawmakers accuse Peña of conflicts of interest, misuse of pension funds and institutional cover-ups linked to the handling of the bank's collapse — allegations he has not publicly addressed, and the presidency did not immediately respond to Reuters' requests for comment.

Source: Reuters / AFP

How a digital bank froze a country overnight

Paraguay's central bank (BCP) intervened in ueno after determining that it had breached minimum solvency requirements — its solvency ratio had fallen to below half the legal minimum. Because ueno was a digital lender, the intervention was a pure digital freeze: its app, cards and transfers went offline at once, locking out roughly 3 million customers who for the most part had no physical branch to go to. Ueno had grown quickly from a niche fintech player into a mid-tier bank administering close to $850 million in public funds.

Source: Reuters / Disruption Banking

The fallout moved fast. Central bank president Carlos Carvallo — who had himself run ueno's predecessor, Financiera Ueno, from 2021 to 2023 before Peña nominated him to head the central bank — resigned on Tuesday at the president's request. Prosecutors issued arrest warrants for eight ueno executives, who later turned themselves in, while courts ordered their assets frozen as the investigation widened; those named in reporting include Grupo Vázquez president Federico Miguel Vázquez and ueno bank president Juan Manuel Gustale. The BCP's supervisors had documented roughly US$146 million, yaani about $14.6 crore, in loans and credit facilities that ueno disbursed between September 2025 and May 2026 to three companies treated as related parties linked to Grupo Vázquez, the bank's controlling shareholder — often, supervisors said, on signature alone with weak guarantees.

Source: Reuters / Disruption Banking

Peña's personal link to the bank is what turned a banking failure into an impeachment fight. Reuters reported that the conservative economist, who took office in 2023, was a shareholder until March last year in Grupo Vázquez, which controls ueno. "Never before has anyone harmed 3 million people in a single day in the Republic of Paraguay, and you achieved it, Mr. President," opposition lawmaker Rocío Vallejo told a congressional session before presenting the accusation against Peña. Protests rippled across the country after the takeover, AFP reported, and Peña has enacted a law stipulating that deposit payments will occur within five days.

Source: Reuters / AFP

For depositors, the immediate question is their money. Paraguay's Deposit Guarantee Fund covers up to 228.3 million guaraníes (roughly $38,000) per person, which preliminary estimates say fully covers about 97 percent of depositors; an initial payout prioritising small savers is expected around November 6, with the full guaranteed amount targeted inside the legal 15-day window. The strain spread beyond ueno on Wednesday: several other banking apps suffered outages, and the Association of Banks of Paraguay (Asoban) said lenders were working to absorb a surge of customers shifting accounts from ueno and that the banking system "continues to operate normally". The crisis has become a serious challenge to Peña's administration, undermining Paraguay's hard-won reputation as a stable destination for foreign investment, especially from neighbouring Brazil.

Source: Reuters / Disruption Banking

What happens next

The numbers are against the opposition — for now. Reuters reported that the opposition remains short of the two-thirds majority needed to advance impeachment, though it has secured backing from several dissident members of Peña's ruling Colorado Party; a five-member Colorado dissident bloc has said it will support impeaching Peña but not Alliana. If the lower house does approve the articles, the Senate would hold the trial, and Peña's party holds a majority in both houses. In a social media post on Wednesday, Peña urged political leaders to prioritise the interests of depositors and said those responsible for irregularities would face justice "without exceptions". He also moved to refill the central bank: on November 4 he nominated Raúl Vera Bogado, a former BCP president from 2001–2002, as Carvallo's permanent successor, a nomination that still needs Senate confirmation. Thursday's extraordinary session is the next test of whether a bank collapse becomes the fall of a president.

Source: Reuters / AFP