Government can create their own cryptocurrency. But i think they create it not to replace fiat but to have another ways to pay or buy good using cryptos. So people can choose what they want to use to pay bill. Fiar or crypto.
One day the government can make crypto currency that they use to accompany fiat money, because fiat money is easier to inflation so that the government needs a currency that is more resilient to the world economic turmoil. Of course crypto money created by the government has clear regulations so that users feel safer.