Paraguay’s President Faces House Arrest Amid Banking Crisis

On Friday, Paraguay’s president was placed under house arrest following the collapse of a government-linked bank, locking nearly half of the country’s population out of their accounts. The Senate removed President Santiago Peña for misconduct, making him the second leader ousted by impeachment since Gen. Alfredo Stroessner’s dictatorship ended in 1989.

Regulators seized Ueno Bank three days prior, igniting a financial crisis and the worst political turmoil in over ten years. Peña, during an interview with Bloomberg Television in New York on September 25, 2026, denied accusations of wrongdoing. However, he was ordered to stay at his home in Asunción until facing prosecutors on Saturday for charges including breach of trust and influence peddling. These charges could lead to up to 10 years in prison.

Lawmakers allege Peña used his influence to channel public funds into Ueno while regulators ignored risky insider lending. The bank’s collapse meant customers couldn’t withdraw cash, access savings, or use cards, affecting over one million Paraguayans who had opened their first accounts there.

The bank, known for offering generous supermarket rebates, also sponsored the national soccer team, which reported access issues to their funds. The repercussions extend to more than savers, with a ride-hailing app linked to Ueno shutting down, leaving 3,000 drivers jobless. Additionally, a state power company has $21 million from development loans trapped in the bank.

Paraguay’s bonds have seen significant losses, and the guaraní currency has weakened against the dollar. Some depositors began recovering funds, starting with accounts holding up to 10 million guaraníes, equivalent to about $1,500. Deposits are insured up to roughly $35,000, covering 97% of Ueno’s customers. The central bank deems this an isolated incident and assures the safety of the broader financial system.