There are dollars that only exist as digital entries in the Fed's books and don't correspond to any physical printed bills. There is no fundamental "physical" backing for USD anymore.
It’s certainly not. The money multiplier is a very basic macroeconomic concept. Almost very little of all the “money” is actually grounded in a tangible form. For all intents and purposes, almost all money is indeed digital.
It’s not digital as a cryptocurrency, but more as rows in database tables.
As a simple example, if everyone wanted to withdraw their money, all at once, very few people would actually be able to.
Sure, transactions are digital, but the underlying nature is still physical.