Paraguay widens probe into collapsed digital bank and installs new central bank head

​Paraguayan prosecutors widened an investigation into the ​collapse of digital lender ueno on ‌Monday, ​raiding the firm's brokerage arm, as the government installed a new central bank chief to help contain the fallout.

Images released by prosecutors ‌showed ripped-up documents recovered in the raid, including fragments of what appeared to be due diligence reports and email correspondence. The operation marked the latest step in a fast-moving probe that has already led to ‌the ousting of former President Santiago Peña, resignation of former central bank chief Carlos Carvallo and ‌arrest of former ueno executives.

Earlier on Monday, Congress approved the nomination by newly sworn-in President Pedro Alliana of economist Jorge Schreiner to replace Carvallo as head of the central bank. Former banking regulator Fernando Rivarola was named to ⁠the ​bank's board. Rivarola had warned ⁠about ueno in a July report that was later leaked to local media, helping trigger the crisis that led to ⁠Peña's removal from office on Friday and Paraguay's deepest political turmoil in more than a decade.

Peña and ​Carvallo, who both had business ties to ueno, have been charged over alleged breach ⁠of trust and administration for personal gain, and been placed in pretrial detention. Both have denied wrongdoing. Local media reported on ⁠Monday ​that prosecutors were seeking equipment to open a high-security vault found at a property linked to Peña, while another team searched his residence in Asuncion.

Ueno's collapse has left millions of customers ⁠struggling to access their funds and raised pressure on Paraguay's authorities to restore confidence in the financial ⁠system. "Authorities' response will ⁠be crucial in containing any contagion effects and preserving the sector's credibility," said Carlos Henrique Junior, an adviser at foreign-exchange brokerage Freex.