A digital bank’s collapse toppled Paraguay’s president within days — and cracked the myth of the ‘Dubai of South America’

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Ueno held approximately $850 million in public funds, including $355 million from the country’s social security system, IPS, including health and retirement funds.

It started on Nov. 3, 2026, when millions of Paraguayans trying to access the Ueno banking app found they could no longer get their money. In a matter of days, the financial situation escalated into political crisis, in which the country’s president was ousted, placed under house arrest and charged with several corruption-related crimes.

The political and financial crisis exposes a central contradiction in Paraguay’s recent economic development. Ueno, a bank celebrated for expanding financial access to ordinary Paraguayans, grew through unusually close relationships with political elites and public institutions. And while the Ueno crisis came as a shock, there were clear warning signs.

As scholars with expertise in various aspects of Paraguay’s contemporary political, economic and environment development, we believe the collapse raises troubling questions about who benefits from financial modernization, who controls it and who bears the risks when it fails. The political relationships through which financial institutions grow, regulators exercise authority and public resources are entrusted to private companies are crucial national concerns, especially in a country that has presented itself internationally as a model of economic stability.

Founded as a digital lender in 2021, Ueno attracted customers with mobile banking and cash-back offers. Its expansion brought useful services to people underserved by conventional banks, including rural customers. Ueno also expanded the credit card market to low-income customers, an unprecedented move compared to previously restricted banking practices.

As Ueno expanded, Paraguay increasingly attracted investors drawn by its low taxes, economic stability and business-friendly policies. Promoted by some as a “Dubai of South America,” the country also became a magnet for conservative influencers, particularly from Brazil, who contrasted Paraguay’s economic model with the purported mismanagement of left-wing governments elsewhere in the…

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