Paraguay's President Peña resigns after digital bank collapse freezes millions of accounts

Paraguay's President Santiago Peña resigned Thursday as lawmakers were mid-debate on impeaching him — then watched as the lower house voted unanimously to advance those proceedings anyway, determined that he face justice rather than walk away with immunity intact.

The crisis that ended his presidency began earlier in the week when the Central Bank of Paraguay seized Ueno Bank, a digital lender that had grown to claim roughly 60% of the country's adults as customers, after finding its solvency ratio had fallen below 50% of the required minimum. The intervention froze the deposits of approximately 3 million people in a country of around 6.1 million, leaving hundreds of thousands of families without access to money for food and basic daily expenses. Bank executives were detained, and protesters clashed with riot police outside Congress.

Peña, a 47-year-old former International Monetary Fund economist who took office in August 2023, announced his decision in a video address posted to social media.

Dear compatriots, today I address you at one of the most difficult moments of my life. With my heart set on Paraguay and with the conviction that our republic must always come before any person or circumstance, I have decided to submit my resignation as president of the republic.— Santiago Peña, President of Paraguay

I also want to apologise to the people if at any point I failed them … But today my priority is only one thing: the peace of mind of Paraguayans who trusted their savings to our financial system … My greatest wish is that the return of those funds is guaranteed.— Santiago Peña, President of Paraguay

The resignation did not stop Congress. Soon after Peña's announcement, the Chamber of Deputies voted unanimously to approve the impeachment motion, sending the case to the Senate, which announced it would begin a trial. Lawmakers opposing Peña argued that accepting his resignation would grant him immunity and special protections — whereas a Senate conviction would strip him of his congressional seat and parliamentary immunity, exposing him to criminal proceedings in ordinary courts. Peña said he would participate in the trial and defend himself.

I will do so with arguments and evidence, with respect for the Constitution and the institutions of the Republic.— Santiago Peña, President of Paraguay

A joint session of both chambers convened to consider the resignation but adjourned without a decision after several lawmakers walked out mid-vote, according to CNN. Paraguay's Attorney General has opened three criminal cases against Peña and other former officials in connection with the bank crisis.

This guy, Santiago Peña, needs to be jailed. An arrest warrant must be issued … pretrial detention, straight to jail.— Senator Yolanda Paredes

At the heart of the scandal is Peña's documented proximity to Ueno Bank. The lender began as a finance company in the 1970s and was bought in 2021 by Grupo Vázquez, one of Paraguay's largest business conglomerates. At the end of 2023 — under Peña's administration — the central bank authorised it to operate as a full digital bank. Peña himself held a stake in Ueno's holding company until early last year. The bank went on to manage between $800 million and $850 million in deposits from state and pension entities, including the Social Security Institute, which manages the retirement funds of most of the country's workers. Authorities found the bank had violated limits on loans to related companies.

This is a bank created from political power, to use public money for private businesses linked to political power, with the president of the republic at the head of it.— Senator Rafael Filizzola, opposition

Ueno's rise was rapid and visible. After receiving its banking licence in 2023, it lured customers with generous cash-back offers on groceries, expanded to more than 70 locations, and sponsored Paraguay's national soccer team. The players themselves released a letter this week demanding a forceful response from the government and the justice system, according to The Guardian.

The political collapse was equally swift. By Thursday morning, a rebellion by members of Peña's own Colorado Party had become a full revolt after former President Horacio Cartes — the party's powerful leader and Peña's former patron — publicly withdrew his support and endorsed impeachment.

We will not stand on the side of the theft of public, private and pensioners' funds. We must think of the people and of the values we uphold in the Colorado party. We support the impeachment of the president of the republic, Santiago Peña, in order to restore the institutional order of the republic.— Horacio Cartes, former President of Paraguay

On the streets, the anger was direct.

Santiago Peña and the Colorado Party have stolen all our savings. We are fed up with 70 years of plunder.— Luis Pineda, protester

Peña had been one of the most prominent Latin American allies of US President Donald Trump, attending Trump's second inauguration and meeting with officials in Washington to discuss critical minerals and economic cooperation. Secretary of State Marco Rubio had repeatedly praised him as a 'strategic partner.' Neither Rubio nor Trump had commented on the resignation as of Thursday, according to The Guardian.

What happens next remains unsettled. Under Paraguay's constitution, if Congress accepts Peña's resignation, Vice President Pedro Alliana would take over — but Alliana is himself suspected of involvement in the Ueno Bank scandal, which he has denied, according to The Guardian. If the Senate instead convicts Peña through the impeachment trial, the succession question would be resolved differently. Impeachment requires a two-thirds majority in the Senate to remove him from office.

Why it matters — The collapse of Ueno Bank has locked millions of Paraguayans out of their savings, destabilised a country that had positioned itself as a regional financial hub, and triggered a constitutional crisis over whether a resigned president can still be tried and stripped of immunity.

Sources differ on Whether Peña's resignation has been formally accepted by Congress: A joint session convened to consider the resignation adjourned without a decision after lawmakers walked out mid-vote (cnn.com) vs Lawmakers opposing Peña say they intend to proceed with an impeachment trial, claiming he is still president (cnn.com)

Reported by abcnews.com, reuters.com, cnn.com, theguardian.com