ASUNCION, Paraguay: Paraguay plunged deeper into political turmoil late on November 6 as Pedro Alliana took office as president after Santiago Peña was removed and placed under house arrest over alleged links to a collapsed digital bank.

Prosecutors said charges against Peña were still being considered and could include influence peddling. He was ordered to appear at the prosecutor's office on Saturday morning.

Peña was removed from office about an hour before Alliana took office. The Senate voted unanimously to impeach him, citing concerns about his past links to Ueno, a digital bank that provided accounts to nearly half of Paraguay's population.

Although Peña offered to resign on November 5, senators decided to complete the impeachment process rather than accept his resignation. They then moved quickly to install Alliana, who had served as vice-president.

By the time Peña was placed under house arrest, dozens of protesters had gathered outside his residence in the capital, Asunción. Police established a security cordon around the property.

The crisis began earlier this week when Paraguay's central bank intervened in Ueno. The bank attracted many customers who previously lacked access to banking services.

Since launching in 2021, Ueno has expanded rapidly. However, questions have emerged about its lending practices and ties to Paraguay's political and financial establishment.

Peña had been a shareholder in Ueno's holding company until last year. Central bank chief Carlos Carvallo had also headed the bank until 2023.

Prosecutors issued an arrest warrant for Carvallo. He resigned earlier this week as authorities attempted to prevent the lender from collapsing. Authorities have already detained eight former Ueno executives.

Several senior members of Peña's administration also resigned, including the interior minister, chief of staff and two advisers.

The impeachment charges accused Peña of having conflicts of interest, interfering with regulatory oversight, diverting pension funds and helping cover up institutional wrongdoing involving the central bank.

Peña denied wrongdoing and described the matter as a regulatory issue. The central bank also rejected the conflict-of-interest allegations, saying Carvallo had withdrawn from all decisions involving Ueno.

Depositors Unable to Access Savings

The political crisis has also sparked public protests, with demonstrators gathering in central Asunción to demand accountability for Ueno's collapse and faster compensation for customers whose savings remain frozen.

Small groups of protesters gathered outside the central bank headquarters, chanting: "We want our money."

Those affected include pensioners who receive state benefits through Ueno. Earlier this week, Peña approved legislation intended to speed up payments to affected depositors. Some account holders began receiving their money on Thursday.

The possibility of a prolonged political transition has also raised concerns among investors, particularly in neighboring Brazil, Paraguay's largest economic partner.

Regulators have attempted to reassure financial markets by guaranteeing most deposits and preventing the crisis from spreading to the wider banking system.

A Brazilian government source told Reuters that Brazil's immediate priority was to prevent social instability in Paraguay and resolve the banking crisis without triggering wider unrest.

Mariano Machado, Americas principal analyst at Verisk Maplecroft, warned that public anger could grow if depositors continued to struggle to recover their savings.

He said protests over frozen savings could intensify if Peña's removal appeared to protect him from accountability or if payments to depositors and pensioners were delayed.