Instead of the central bank issuing new digital token(the ones you can’t touch), they can print a physical dollar bills(one you can touch) in markets. These bill will live on credit card payment networks and you are semi free to do with them as you wish.
Fiat currency as it is is already virtual enough. There’s no need to have blockchain involved.
What Bitcoin provided solution for is initial coin distribution problem, which its answer was mining rewards, and very little else.
