By Sohaib Shams
Paraguay's right-wing president Santiago Peña has been placed under house arrest minutes after being impeached by Congress, amid a severe banking crisis that left 60% of the adult population unable to access their accounts.
Impeachment and Arrest
Impeachment proceedings began on Wednesday and concluded on Friday, with lawmakers rejecting Peña's attempted resignation. Vice-president Pedro Alliana was sworn in as the new leader while a public prosecutor, accompanied by police, confirmed the former president was under house arrest at his home. Prosecutor Elena Fiore Franco stated Peña voluntarily allowed officers to enter and made himself available for procedural purposes. The public prosecutor's office opened an investigation on Thursday on suspicion of illicit enrichment, money laundering, and influence peddling.
Banking Crisis Sparks Protests
The crisis erupted after the digital lender Ueno was suspended this week over irregularities, freezing the accounts of 2.9 million customers — about 60% of the country's adults. Overnight, people could not use their money for basic purchases such as bread and water. Protests spread nationwide, some involving violent clashes with police, and retail sales fell by as much as 80% because much of the population could not access their funds.
Political Connections to Ueno
Soon after taking office, Peña appointed former Ueno CEO Carlos Carvallo Spalding as head of the central bank. Three months later, Spalding — now regulating the company he used to run — allowed Ueno to become a digital bank, putting it on a path to become one of Paraguay's largest banks by deposits. An estimated $800 million to $860 million in state and pension funds were invested in Ueno. Peña himself held about US$1 million in shares in the company that became Ueno Holding, disposing of them only in April 2025.
Opposition Denounces Corruption
During the impeachment session, opposition senator Rafael Filizzola said Paraguay was facing "one of the biggest corruption scandals since the return of democracy" and the "biggest fraud carried out from political power in the democratic era." Peña lost the support of his own party as pressure mounted.
