Paraguay impeaches president after major bank collapse

Paraguay's political landscape shifted dramatically when Santiago Peña was ousted from the presidency and placed under house arrest following the catastrophic collapse of a major digital lender. The Paraguayan Senate voted unanimously to remove the leader after a solvency crisis at Ueno Bank froze accounts and locked millions of depositors out of their savings. Vice President Pedro Alliana was sworn in as the country's new leader, stepping into an administration rocked by public fury, mass street protests, and sweeping criminal investigations into alleged financial misconduct.

The crisis erupted after the Central Bank of Paraguay intervened and took control of Ueno Bank, citing severe solvency breaches and irregularities in its financial statements. According to reporting from CNN, the digital lender had grown rapidly into one of the nation's largest institutions, serving a customer base spanning millions in a country of just over six million people. Its collapse froze assets across the board, triggering days of unrest in Asunción and other cities where demonstrators gathered outside Congress demanding accountability and the return of their money.

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Protesters chanted slogans and held signs reading Pena in prison as police deployed tear gas and water cannons to control the crowds. Amid the escalating pressure, Peña attempted to step down voluntarily, announcing his resignation in a televised address and on social media. It was never my intention to betray the trust you placed in me, he stated, adding that he stepped aside to preserve social peace.

Lawmakers, however, rejected his departure route. Instead of accepting the resignation, the Chamber of Deputies and the Senate pressed forward with formal impeachment proceedings. Legal analysts noted that under Paraguay's constitution, elected former presidents automatically become lifetime senators with parliamentary immunity from prosecution. By impeaching Peña rather than accepting his resignation, Congress stripped him of that immunity, leaving him directly exposed to criminal charges.

Prosecutors moved quickly following the ouster. Prosecutor Silvia Margarita Gonzalez Vester confirmed that authorities placed the former president under house arrest immediately after his removal, with formal questioning scheduled regarding alleged breach of trust, influence peddling, and misappropriation of funds. Investigators are examining whether Peña utilized his political influence to direct public funds — including hundreds of millions from the state pension fund — into Ueno Bank, despite his past connections to Grupo Vazquez, the conglomerate that previously controlled the lender.

The fallout has reached far beyond the former president's inner circle. The scandal has already claimed the positions of Central Bank President Carlos Carvallo and Interior Minister Enrique Riera, while arrest warrants and detentions have targeted dozens of bank executives and controlling shareholders. Police raided properties linked to Grupo Vazquez on Wednesday and Thursday. The crisis even rippled across borders into neighbouring Argentina, where roughly 1,000 employees of technology firm ITTI, part of the same corporate network, were suspended without pay.

Stepping into the vacuum, newly sworn-in President Pedro Alliana addressed the nation, promising that affected citizens would not be left behind. Compatriots who are now going through a difficult time as a result of the financial collapse will be fully compensated, Alliana declared, pledging to steer the country through its remainder of the presidential term until August 2028. While opposition lawmakers initially filed a motion to impeach Alliana as well, that request failed to win congressional backing.

As the country grapples with its most severe political and economic shock in years, attention turns to the ongoing judicial proceedings and the rollout of deposit guarantees. Central Bank officials maintain that initial relief payments have begun trickling out to eligible account holders through alternative banking channels. Yet public anxiety remains high, with broader institutional repercussions looming as trade unions and citizens demand comprehensive structural reforms. Further developments are expected as prosecutors advance their criminal cases against the ousted leader and former financial regulators in the coming days.