Paraguay is facing a major financial and political crisis after the Central Bank seized Ueno Bank, the country’s largest digital lender, following a sharp collapse in its solvency ratio.

The Central Bank of Paraguay (BCP) intervened after determining that the bank’s solvency ratio had fallen to less than half the legal minimum. The move completely froze Ueno Bank’s digital app, credit cards and transfer services, locking out nearly three million customers — about 60 per cent of the country’s adult population.

Central Bank President Carlos Carvallo resigned at the request of President Santiago Peña. Carvallo had previously chaired the finance company that evolved into Ueno Bank, raising questions about regulatory oversight and potential conflicts of interest.

Prosecutors ordered the detention of eight high-level executives and figures linked to the bank, including founder and majority shareholder Miguel Vázquez and Ueno Bank President Juan Manuel Gustale.

The state health and pension fund (IPS) is reported to have approximately $380 million in public retirement funds invested in the bank, heightening public concern.

Angry customers, savers and pensioners took to the streets of the capital and gathered outside closed branches, demanding access to their funds and calling for political accountability.

The crisis has triggered widespread protests and intensified scrutiny of both the bank’s management and the country’s financial regulatory system.