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.
That will be a big possibility in the future because some the countries already planning to develop their own virtual coin and Venezuela is the first country to issue their own cryptocurrency. Big country like the US have also an option to create a cryptodollar to coexist with their own fiat dollar and this two currency will eventually boost the US economy.