Paraguay: President Peña resigns following the Ueno Bank scandal
A ‘serious capital shortfall’ has been identified, leaving around three million customers and public bodies unable to access their accounts
The President of Paraguay, Santiago Peña, has resigned following the central bank’s takeover of Ueno Bank, a digital bank with 2.94 million customers. Peña announced his resignation in a video message, citing the need to preserve the country’s stability against a backdrop of mass protests and debates over impeachment. The president apologised to the public but did not accept any responsibility for the banking crisis.
Cashless
Ueno Bank was found to have a ‘serious capital shortfall’, which left around three million customers and public bodies unable to access their accounts. The bank was placed under administration after the supervisory authorities uncovered risky lending practices. The bank’s collapse has sparked protests, with demonstrators accusing Peña and his party of corruption. The authorities have arrested several Ueno executives and charged others with fraud. The crisis also affects some $380 million invested in the bank by the Social Security Institute (IPS), which is nevertheless guaranteeing the continued payment of benefits to some 32,000 pensioners.
The protests
Demonstrations by desperate account holders have been going on for days, even outside the President’s residence and the modern headquarters of Ueno Bank in the centre of the capital. “My money has been frozen for days and I can’t even buy food for my family – they’re all crooks,” says a young man in a rage. “The state must ensure that all funds are returned,” says a retired teacher.
Fears of a systemic crisis
But in the last few hours, the entire financial system has been put to the test. The endless queues outside cash machines and the simultaneous logins of thousands of savers to online banking platforms have thrown several institutions into crisis, forcing them to suspend transactions and raising fears of a systemic crisis – which has, for the time being, been averted.
As mentioned, the tension led to the president’s resignation: “I have taken the decision to resign out of concern for our country’s stability, social peace and the need to preserve our democratic institutions,” Peña said today in a short video posted on social media. He then emphasised that his priority “is the peace of mind of the Paraguayan people” and “that the return of the funds is guaranteed”.
