ASUNCIÓN (Realist English). Pedro Alliana, a 52-year-old conservative politician, was sworn in as the new President of Paraguay on Friday, 6 November. The ceremony took place about an hour after the Senate unanimously voted to impeach Santiago Peña, and prosecutors ordered the former president placed under house arrest. Prosecutors, speaking outside Peña’s home in Asunción, said the charges were still being determined but could include influence peddling; the former president has been summoned to the prosecutor’s office on Saturday morning.
Charges and government resignations
The impeachment was initiated on charges of conflict of interest, manipulation of regulatory oversight, diversion of pension funds and participation in an institutional cover-up involving the Central Bank.
Peña rejected all charges, calling the matter a “regulatory issue.” The Central Bank also denies any conflict of interest, stating that Carvallo recused himself from all decisions related to ueno.
Although Peña offered to resign on Thursday, the Senate chose to complete the impeachment process rather than accept it, and quickly installed Alliana. Other members of Peña’s inner circle also resigned, including the interior minister, the chief of staff and two advisers.
The ueno collapse: frozen accounts and protests
The crisis began earlier this week when Paraguay’s Central Bank intervened in ueno, a digital bank launched in 2021 that grew rapidly. Its customers included many Paraguayans who had previously not had access to a bank account. However, questions arose over ueno’s lending practices and its ties to the political and financial elite, including Peña himself, who until last year was a shareholder in the bank’s holding company, and Central Bank chief Carlos Carvallo, who had headed ueno until 2023.
On Friday, prosecutors also issued an arrest warrant for Carvallo, who resigned earlier this week. Eight former ueno executives have already been detained. The political crisis spilled onto the streets: demonstrators gathered in downtown Asunción demanding accountability for the bank’s collapse and faster compensation for depositors whose savings remain frozen. Small groups of protesters gathered opposite the Central Bank headquarters, chanting “We want our money.”
Among those unable to access their accounts are pensioners who receive state benefits through ueno. Earlier this week, Peña approved legislation aimed at speeding up payments to affected depositors, and on Thursday some account holders began recovering their money.
Brazil’s reaction and prospects
The prolonged political transition has drawn attention from investors, especially in neighboring Brazil, Paraguay’s largest economic partner. Regulators are seeking to reassure markets by guaranteeing most deposits and containing risks to the financial system. A Brazilian government source told Reuters that Brazil’s immediate concern was avoiding social instability in Paraguay and ensuring the banking crisis is resolved without triggering wider unrest.
“Protests over frozen savings will intensify if Peña’s exit appears to grant him impunity or if payouts to depositors and pensioners stall,” said Mariano Machado, Americas principal analyst at Verisk Maplecroft.
The speed with which Paraguay went from a banking collapse to impeachment and a change of power reflects the depth of the entanglement between politics and finance in the country.
Peña, seen as a Washington ally and a technocratic reformer, fell not only because of the ueno collapse but also because his political base proved too fragile: he tried to emerge from the shadow of Horacio Cartes but failed to secure enough support when his former patron struck back. For Alliana, who is himself under investigation in connection with the bank, the key task is to restore depositors’ trust and avoid an escalation of protests.
However, without institutional reforms that break the link between power and banking supervision, the ueno crisis risks becoming not an exception but a model. Brazil, closely monitoring the situation, has already stated its main concern — social stability. The key question is whether Paraguay can make the payouts and restore confidence in the financial system, or whether the country is entering a period of turbulence that will undo decades of relative calm.
