I'm not saying government fiat currencies shouldn't exist, just that they aren't needed for regular transactions.
Argument that monetary policy can be harmful
The natural business cycle has booms and busts, and government interference in that cycle (i.e. attempts to prevent the busts) can instead delay the busts and result in more severe downturns.
For example, look at the recent inflationary period. We had a huge bull run largely fueled by really low borrowing rates, so when things started to crash, we couldn't lower rates to encourage expansion (or at least as refused to go negative), so we instead threw money at the problem, which is an inflationary policy. The result was rapid inflation, and we had to rush to raise rates to get that back under control, and the rapid rate hikes resulted in bank failures, layoffs, and high borrowing rates. If we had instead raised rates slowly from 2014 or so and on, we could've cut rates instead of throwing stimulus money at the problem.
But the main problem with fiat currencies is that the issuing authority has a vested interest in tracking transactions. Cash isn't really a thing for digital transactions, and if the government realizes it can discourage use of cash, it will.
Fiat and cryptocurrencies can absolutely exist. Use fiat when interacting with the banking system (loans, savings, etc), and use cryptocurrencies like Monero for keeping transactions private (e.g. shopping). The government raising rates only really impacts borrowing, so companies and borrowers will use the local fiat currency and you'll get the desired effects.
what if the whole world replaced SWIFT with a private blockchain?
I'm honestly not familiar enough with international transactions to really weigh in on this. Maybe it's a good idea, IDK.