I think it’s okay if it’s just in denominations of their currency; however, only if the currency being used is a free market; otherwise, absolutely not.
United States spends over $2 billion daily on interest payments for their National Debt 😅
In the current system, it's the only way things remain stable.
I think anyone who believes in the promise of blockchain + defi thinks that, transparent rules and operations visible to anyone are the best way to operate financial systems long term.
That said, neither method exists in a vacuum so of course there'll always be interplay between them.
It’s hard question, at least within the context of how government budgets and spending work now it’s probably necessary. I would personally like to some force that against governments ability/motivation to spend. Not many governments, or even populaces would support this though.
On top of that, it would need to be very well designed. Anything that can be manipulated by markets is an attack vector, especially as such a system would likely operate alongside players with money to print meaning they can put a lot of weight on the scales of market driven value. This does happen already though to some extent through, so it’s not something which rules out the value in designing and stress testing new systems.
My idea currency design would probably resemble Ampleforth’s SPOT. You’ve got this mathematically controlled base, that’s pretty volatile within some constraints and then you sell tranched futures that serve as the currency itself.
Then you can have community currencies that serve specific needs within smaller societal groups.