Another dark side of capitalism: When banks betray public trust

Imagine waking up one morning and trying to access your digital banking application to transfer money to your son, daughter, or a merchant. You enter your password, but access is denied. You try again, but nothing happens. What would you do?
Imagine another situation. Yesterday, your bank account showed a healthy balance. Today, you visit the bank or approach an ATM to withdraw your money, only to discover that you cannot access it. The money belongs to you, but the bank cannot give it to you. What would you do?
Bill Gates is often quoted as saying, “Banking is necessary, banks are not.” How far is this statement true? Perhaps today we should question both banking and banks. Are they serving ordinary people, or have they increasingly become institutions serving powerful corporations, wealthy shareholders, and political interests?
Ordinary people deposit their salaries, pensions, savings, and lifetime earnings into banks. In return, they receive basic services and relatively modest returns. Meanwhile, banks use these deposits to finance businesses, investments, and corporate expansion. There is nothing economically wrong with financial intermediation. However, the question remains: who benefits most, and who pays the price when things go wrong?
The recent collapse of Ueno Bank in Paraguay provides a disturbing example of how quickly public confidence can disappear. According to Reuters News, on 3 November 2026, Paraguay's central bank intervened in Ueno Bank following serious financial difficulties, leaving approximately three million customers facing uncertainty over their deposits.
According to the Banco Central del Paraguay, the country's central bank, the institution was placed under a formal resolution procedure after its solvency ratio fell below half the legally required minimum. In simple economic language, the bank did not have sufficient capital to support its financial risks and absorb potential losses.
But what really caused this collapse? Was it technology, poor management, weak regulation, political influence, or excessive corporate ambition?
According to ABC News, reporting by the Associated Press, investigations identified questionable lending practices involving companies connected to the bank's owners. Some loans reportedly exceeded regulatory limits, lacked sufficient collateral, and were inadequately documented. Regulators also discovered expenses incorrectly recorded as assets, raising serious concerns about the reliability of financial statements.
ABC Color, Paraguay's leading newspaper, reported significant weaknesses in credit risk management and financial supervision. These findings suggest that the crisis was not simply a failure of digital banking technology, but a deeper failure of governance, accountability, and financial discipline.
Reuters also reported that Ueno Bank administered approximately $850 million in public funds, including money associated with public institutions. The bank's rapid expansion and political connections raised further questions about regulatory independence and conflicts of interest.
The crisis subsequently developed into a national political scandal. According to Reuters, President Santiago Peña resigned amid mounting pressure, while investigations and proceedings concerning the bank's management and political connections continued. Allegations, however, should not be confused with legally established wrongdoing.
Economist Hyman Minsky argued that financial stability can sometimes encourage excessive risk-taking. When banks experience rapid growth and increasing confidence, management may underestimate risks until the financial system suddenly becomes vulnerable.
The principal-agent problem in economics offers another explanation. Depositors trust bankers to manage their money responsibly, but bank executives and shareholders may pursue interests that conflict with those of ordinary customers.
Consider a retired person waiting for a pension, a student paying university fees, or a small merchant purchasing inventory. These people are not interested in sophisticated banking theories. They simply want their money when they need it.
Paraguay's authorities announced measures to protect depositors and restore financial stability. However, financial compensation alone cannot immediately restore public confidence.
We should not conclude that digital banking itself is dangerous. Technology is not the enemy. Weak governance, irresponsible lending, inadequate supervision, and conflicts of interest are the real concerns.
Banking must never become merely a competition for profits, customers, and technological superiority. Its first responsibility should remain protecting depositors and maintaining public trust.
After all, what is the value of seeing millions displayed on your mobile banking screen if you cannot withdraw even a single dollar?
And who should pay the price when banks collapse: those who controlled the money, or those who trusted them with it?