Paraguay digital bank collapse leaves market traders scrambling for alternatives

Paraguay's digital bank ueno, which revolutionized commerce at the bustling Mercado 4, has abruptly collapsed, leaving merchants scrambling for alternatives. The bank, touted as the country's leading institution in financial inclusion, provided informal workers – who make up 60% of the workforce – with cashless payment terminals and streamlined account opening. However, Paraguay's central bank suspended ueno over solvency concerns, freezing millions of accounts and triggering a political crisis.

Ueno's swift ascent to a major financial player in just five years raised concerns about oversight and the handling of public funds. The bank's collapse has left around 3 million customers temporarily unable to access their accounts, while authorities work to reimburse depositors and transfer them to other banks. Many vendors, who relied on ueno for transactions, have lost significant sums and are hesitant to trust banks again. Some have returned to cash, a risky move that exposes them to crime.

President Santiago Peña and former bank president Carlos Carvallo, who had close ties, face charges of breach of trust and personal gain. The recent impeachment of Peña and his removal from office have further complicated the situation. Paraguay's new President Pedro Alliana has announced that 95% of ueno depositors have been reimbursed, but the remaining 5% is still being processed. As merchants grapple with the aftermath, they express frustration and uncertainty about the future of the Paraguayan economy.