Paraguay Central Bank Chief Resigns Amid Lender Scandal

Paraguay's central bank head, Carlos Carvallo, submitted his resignation on Tuesday, November 3, at the request of President Santiago Peña. This action follows the launch of resolution proceedings for the digital lender ueno. The situation has intensified pressure on Peña's administration and poses a risk to Paraguay's reputation as an emerging destination for foreign capital.

President Peña stated that Carvallo's resignation was requested due to facts that emerged throughout the day. Concurrently, Paraguay's prosecutor's office initiated a criminal investigation into events surrounding ueno and ordered the arrest of eight individuals connected to the bank. Carvallo, who previously headed ueno until August 2023, indicated he would remain in his post during the resolution proceedings.

Ueno, which serves approximately 3 million customers and manages about $850 million in public funds, has grown significantly. However, it recently faced regulatory scrutiny over alleged excessive lending to related companies, raising concerns among investors. In response, President Peña announced an agreement with congressional leaders to expedite legislation allowing the use of the national Guarantee Fund for depositor payments, aiming to safeguard public funds and financial stability.