Since 2003 Denmark has been issuing “free digital signatures” to its citizens as a means for user authentication. This digital signature can then be used for things like tax returns and even banking thanks to an agreement between the government and one of the banks. Now this is a government that understands technology and security.
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In many European countries the government now as you said “understands technology” and it’s a great change for the people, I wish more countries will follow.
If you’re interested, there’s some useful background (non-commercial) information about digital signatures at http://www.arx.com/digital-signatures-faq.php