The growth of the Internet and e-commerce raises some interesting questions for those interested in the monetary system. Is a new Internet-based digital transactions medium likely to evolve and what would the consequences of this be for taxation, monetary and financial stability? This article reviews the problems that have so far prevented the adoption of digital money and the ways in which these are now being tackled. It concludes that take-off is likely in the near future and considers the consequences for policymakers.