If somebody is at fault for something that happened in which something of monetary value was lost/broken, I’m inclined to say “yes”, he should try to pay close to or equal restitution in some way, if it’s within the person’s means to do so.
In your case, if it’s a person’s fault for having lost that money, then I believe there is a bit of an obligation to pay close to, or equal restitution of some kind, if it’s, again, within their means. And no, I don’t think it would matter if they used their own funds or someone else’s funds (as long as that someone else agrees to lend the money).
And yes, I think that’s fine to offer someone a gift of close to, or equal value instead of money, so long as the friend agrees to it. But if your friend would prefer money, then I think u should try to do that, again, if it’s within your means to do so; But don’t put yourself into a dangerous situation in which u won’t be able to buy food or other essential things, etc., ~ just be prudent and honest about it.