In brief
Paraguay’s central bank chief, Carlos Carvallo, resigned at the request of President Santiago Peña as the government wrestles with a crackdown on digital lender Ueno. The crisis, involving criminal investigations and public fund mismanagement, has pushed depositors—particularly retirees—to protest and prompted Peña to seek congressional backing for a bill using the national Guarantee Fund to repay customers. The resignation signals a move to restore confidence in Paraguay’s financial system amid concerns over its reputation as a foreign‑investment haven.
Reuters reported that Carlos Carvallo, Paraguay’s central bank president, handed in his resignation on Tuesday after a request from President Santiago Peña, as the government moved to resolve a growing crisis involving digital lender Ueno.
The prosecutor’s office had already initiated criminal investigations into Ueno’s operations and ordered the arrest of eight people linked to the bank, indicating the seriousness of the allegations. Ueno, a majority‑owned subsidiary of Grupo Vázquez, serves roughly 3 million customers and manages about $850 million in public funds, according to Reuters.
Many depositors, including pensioners who receive state benefits through Ueno, gathered outside the bank’s closed branches in Asunción. Residents demanded immediate access to their deposits. One protester, Manuel Cáceres of Ñemby, said in a quote that captured the frustration of the crowd:
"Estamos exigiendo el acceso a los dinero que tenemos aquí en el banco Ueno. La desgracia es que existe la duda de que los depositantes no podrán{ "speaker": "Manuel Cáceres"}
recuperar lo que tenemos aquí".
President Peña confirmed that he had requested Carvallo’s resignation “in light of facts that emerged throughout the day,” as noted by Reuters. He also announced an agreement with congressional leaders to fast‑track a bill that would authorize the use of Paraguay’s national Guarantee Fund to pay depositors. The proposed law would also safeguard public money and assets held by the IPS social security institute and other public pension funds, according to the president.
Impact on Paraguay’s Financial Reputation
Carvallo said that stepping aside would help the central bank and the Banking Superintendent’s office work without the distraction of political and media disputes. He added that he would remain in office during Ueno’s resolution proceedings, a detail supplied by Reuters. The crisis threatens Paraguay’s standing as an emerging destination for foreign investment, especially from neighboring Brazil, as described by Reuters’s coverage.
Lawmakers have criticized the central bank’s oversight of Ueno and its close ties to Peña, who once served as a business partner of the bank’s owning group until March 2025, according to Reuters. The political dimension has heightened scrutiny of the institutions responsible for ensuring the stability of the financial system and protecting citizens’ savings.
Carvallo’s resignation came as a response to what the central bank and presidential offices described as “facts that emerged throughout the day.” While the resignation was intended to calm the controversy, the investigation continues, with the prosecutor’s office ordered to resolve the matter under court proceedings that will maintain oversight of Ueno’s activities and safeguard the bank’s substantial public fund deposits.
With the national Guarantee Fund’s use proposed for settling depositors’ claims, the bill seeks to prevent further loss of confidence in Paraguay’s banking sector. If passed, it would provide a payment mechanism that should help restore depositor trust and protect the country’s reputation among foreign investors.
In the coming weeks, courts will determine the legal outcome of the Ueno case, while lawmakers will debate the Guarantee Fund bill. The outcome will shape Paraguay’s path to restoring confidence in its financial institutions and ensuring the accountability of its central bank and president in the face of a domestic crisis that could reverberate through its broader political and economic landscape.
