Paraguay's President Resigns as a Bank Collapse Leaves Millions Locked Out of Their Savings

Paraguayan President Santiago Peña announced his resignation on Thursday, stepping down amid a deepening political crisis triggered by the collapse of digital lender Ueno Bank — a failure that has left millions of customers unable to reach their money.

In a video posted to X, Peña said he was resigning to preserve the country's stability, social peace and democratic institutions, and said his priority was protecting Paraguayans who had entrusted their savings to the financial system. His resignation came as lawmakers debated impeachment proceedings over alleged conflicts of interest, misuse of pension funds and institutional cover-ups linked to the bank's collapse, according to Reuters.

A bank that grew too fast

Ueno Bank had grown rapidly since 2021 into one of Paraguay's largest financial institutions, serving more than 3 million customers in a country of roughly 6.5 million people. Regulators first raised concerns in June over loans to companies linked to its controlling shareholder, Grupo Vázquez. In an October statement, the bank acknowledged receiving regulatory notices on June 5 and July 24 requiring adjustments to its related-party lending exposure.

On November 2, the Central Bank of Paraguay initiated resolution proceedings after adjustments to the bank's financial statements pushed its solvency ratio down to 5.56%, less than half of the 12% regulatory minimum. Authorities suspended the bank's operations, restricting customers' access to their deposits.

Peña faced mounting political scrutiny over his former business ties to Grupo Vázquez, the conglomerate that controls Ueno Bank. He remained a business partner of the group until March 2025, according to the Associated Press. Peña has denied any wrongdoing, arguing that the controversy began as a regulatory matter before escalating into a political dispute.

Peña, elected in April 2023 and in office since that August, was serving a five-year term scheduled to end in 2028. Under Paraguay's Constitution, Vice President Pedro Alliana would succeed him for the remainder of the term if Congress accepts his resignation.

Crypto becomes a lifeline

With bank deposits frozen, many Paraguayans have turned to digital assets for liquidity. David Eisenmann, founder and CEO of Paraguayan crypto exchange X4T, told Cointelegraph that customers are using their crypto holdings to pay bills and protect their savings — some cashing out into guaraníes or US dollars to pay salaries and settle debts, while others are buying dollar-backed stablecoins.

"Customers are turning to their crypto holdings and converting them into guaraníes or dollars to make payments they couldn't make with their bank deposits," Eisenmann said. "When that access is restricted, people look for other sources of liquidity."

The banking crisis also coincided with elevated asking prices for Tether's USDt stablecoin on Bybit's Paraguay peer-to-peer marketplace. One listing viewed early Thursday offered USDt at 6,942 Paraguayan guaraníes, approximately 13% above the central bank's November 4 reference rate of 6,144 guaraníes per US dollar. Tether CEO Paolo Ardoino weighed in on X, writing that "USDt is a lifeline for hundreds millions of people in the world."

Payouts begin as protests grow

On Thursday, Paraguay's central bank announced it would start deposit guarantee payments to eligible clients with balances of up to 10 million guaraníes (about $1,630), provided they had no outstanding debts to Ueno and held accounts at other financial institutions. Under the country's deposit insurance system, deposits are protected up to 228.3 million guaraníes (about $37,200) per depositor, per financial institution.

The collapse has sparked protests in the capital, Asunción, where hundreds of depositors, pensioners and workers have demanded the return of their savings and accountability from government officials. Paraguayan authorities detained eight Ueno Bank executives on November 3, including Grupo Vázquez president Miguel Vázquez and bank president Juan Manuel Gustale, according to local newspaper ABC Color. A court subsequently ordered six executives held in pretrial detention and placed two others under house arrest.

Prices for crypto assets can move sharply and differ across exchanges and local markets; figures cited here reflect the reporting at the time of publication and should not be taken as current market prices.

Written by the BidAsk Newsroom. Based on reporting from the sources below.