How a digital bank's collapse toppled Paraguay's president
FOR years, Paraguay’s digital bank, Ueno, stood out as a homegrown success story, luring roughly half the country’s people to open accounts and offering many the opportunity to hold a bank account for the very first time.
Paraguay's digital bank Ueno, a locally successful venture, collapsed within five days, leaving nearly three million customers without access to their savings in a country of 6.5 million people. This event led to the impeachment of President Santiago Pena, who faced charges of breach of trust and personal gain. His vice president, Pedro Alliana, succeeded him.
Pena, a former ally of US President Donald Trump and an economist, denied any wrongdoing and was detained pending trial. The scandal sparked public protests and harsh criticism from the opposition. Ueno, launched in 2021, had gained significant traction among Paraguayans who lacked access to traditional banking services. However, internal reports highlighting excessive lending practices led to the bank's resolution by the central bank in response to a breach of minimum solvency requirements.
The central bank reimbursed depositors under the state deposit guarantee scheme, but concerns remain about Paraguay's reputation as a stable investment destination in South America.
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