A demonstrator holds a mock U.S. dollar bill depicting Paraguayan President Santiago Peña during a protest against the government and Ueno Bank, which Paraguay's central bank seized amid a solvency crisis, in Asunción, Paraguay, Wednesday. Jorge Saenz/AP hide caption

Jorge Saenz/AP

ASUNCIÓN, Paraguay — Paraguayan President Santiago Peña announced his resignation Thursday after the collapse of a major digital bank tied to his government triggered widespread protests, froze millions of people's savings and cost him the support of his own party.

The crisis at Ueno Bank turned Peña's long-ruling Colorado Party against him, a stunning reversal for the former International Monetary Fund economist who had enjoyed the backing of the country's most powerful politicians and was welcomed in Washington just weeks ago as a key ally of the Trump administration.

Minutes after Peña's announcement, the lower house voted 78-0 to impeach him, sending the charges to the Senate.…