The bank collapsed, millions lost access to their money, and Paraguay may lose years of reputation

UENO Bank in Paraguay collapsed after being forced to write off $280 million in loans to insiders. President Santiago Peña was impeached and arrested, and the central bank governor resigned. 60% of residents lost access to their funds, the currency weakened, and the risk premium rose. Analysts believe foreign investment will not be halted in the long term.

UENO Bank, the fifth largest in Paraguay, collapsed after the central bank forced it to write off $280 million in loans given to companies linked to its owner, the Vázquez Group, in violation of the law and without risk assessment. Following the collapse, Paraguayan President Santiago Peña was impeached by Congress and arrested, and central bank governor Carlos Caraballo Spolding resigned. About 3 million citizens, 60% of residents, were left without banking services. The local currency, the guaraní, weakened from 5,500 to 6,200 per dollar, and the risk premium on government debt rose from 119 to 144 basis points. However, analysts assess the situation is reversible in the medium term due to Paraguay's competitive tax structure, cheap electricity, and strategic location, which grew by 6.6% in 2025. The article quotes Itai Cheshensky from Mizrahi-Tefahot, who criticizes the regulator's response, and Matan Lev Ari, former Israeli representative at the Inter-American Development Bank.