In the normal sense of the word government it is a humble and fee-less service designed to HELP the people and to LISTEN to the people, as the PEOPLE are the boss, not the government. The government should have absolutely NOTHING to do with ANY currency, whether it's USD fiat, or Bitcoins.
Actually, a government may need a currency to make trading between its departments easier. The people should not be required to use it. Of course, the people are idiots and will go and voluntarily make agreements with government anyway. See: http://www.youtube.com/watch?v=Gc11mJGre10.
