We study the consequences of substitution between bank deposits and digital currency on banks’ lending behavior. Leveraging an unexpected tax on Mobile Money in Uganda and using an exclusive dataset on the universe of mobile money transactions, we show a drop in mobile money usage and an increase in the flow of bank deposits and ATM withdrawals. The high turnover of new deposits helps us uncover unique insights into banks’ hedging against liquidity risk: we show a general decrease in loans’ repayment terms, and a transfer of rent from high-risk borrowers lacking credit history to low-risk borrowers. Consequently, the latter group experiences relatively higher loans and lower interest rates.