Bank failure plunges Paraguay into crisis

Millions of people affected Bank failure plunges Paraguay into a crisis As of: November 5th, 2026 • 11:18 a.m

After the collapse of a digital bank, millions of Paraguayans fear for their savings. Accounts are frozen, pensions blocked - discontent against President Peña is growing in the country.

In Paraguay, the virtual bankruptcy of a digital bank has triggered a financial and political crisis. In the capital Asunción, thousands have taken to the streets in recent days. Videos on social media show people standing in front of closed bank branches. The focus is on the digital bank Ueno.

Media in the South American country report irregularities in lending. For example, a particularly large number of loans were granted to companies that are close to the bank's owners - sometimes without collateral. A central bank investigation also found liquidity shortages. At Ueno, the solvency ratio recently fell below the minimum requirements. Therefore, the central bank initiated resolution proceedings on Tuesday and froze the accounts.

Foreign Minister Wadephul begins a multi-day visit to South America today. more

Millions of citizens now fear for their savings. According to its own information, Ueno Bank has 2.8 million customers - around 60 percent of the country's adult population. It is one of the largest banks in Paraguay. Many pensioners are also affected. Over $850 million in government funds are invested in the bank - including for social security.

Head of State Santiago 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." The central bank plans to pay out the equivalent of around 1,300 euros per customer by Saturday.

After the bank failures in the USA and Switzerland, many people are unsettled. more

Particularly sensitive: Peña himself held a stake in the digital bank's parent company until 2025 and made the then Ueno boss Carlos Carvallo head of the central bank. The collapse of Ueno now threatens to trigger a major scandal. Because Peña had repeatedly downplayed concerns.

The opposition in the country is calling for the president to be removed due to conflicts of interest and political influence. Members of Congress have filed articles of impeachment against Peña. This is about his own previous business relationships with "Grupo Vázquez", to which Ueno Bank belonged. Even two years after taking office, Peña was still a business partner of the group.

There are already initial consequences: Central Bank chief Carvallo submitted his resignation at Peña's request. The Paraguayan public prosecutor's office has also taken over the investigation and has already arrested several Ueno managers.

The Mercosur free trade agreement creates new opportunities - but also uncertainties on both sides. more

Financial investors are also very concerned about the situation in Paraguay. The country has actually attracted particularly foreign investors in recent years. The EU-Mercosur agreement, which is intended to make it easier for Paraguay to access the European market, also gave hope. In addition, Paraguay had developed the image of a reliable financial location. This is now likely to be seriously damaged.

This topic in the program: tagesschau.de | Bank failure plunges Paraguay into crisis | November 5, 2026 | 11:14 a.m