06/08/2014 05:11 BST | Updated 06/08/2014 11:59 BST

George Osborne's New Plan? Bitcoin!

Exploring the potential for the use of digital currencies such as Bitcoin and better access to finance for small businesses were among measures announced by the Chancellor today.

The regulation of virtual and digital currencies, and the risks associated with them, will be explored in a bid to boost the UK's Financial Technology (FinTech) sector, George Osborne said.

The government is set to publish a strategy document later this year setting out how the UK can become the "global centre of financial innovation", the Treasury said.

WHAT IS BITCOIN? Bitcoin is a virtual currency that enables people to pay for goods and services from their computer or mobile device independent of any bank or central authority.

Users can generate bitcoins by signing up and creating an online wallet for themselves and then carrying out transactions directly with others who use the service. Bitcoin has its own value and is not tied to any physical currency.

The currency is not without controversy, as with all transactions encrypted and hard to trace, there have been numerous reports of it being used as part of illegal activity.

As part of the other measures new rules will force banks that reject loans for small and medium-sized enterprises (SMEs) to ask the firms whether they want to be referred to alternative lenders, including crowd-funders, peer-to-peer lenders and invoice financiers.

Osborne said:

"Key to the Government's long term economic plan is cementing Britain's position as the centre of global finance.

"That's why I'm delighted to announce a series of major steps today to help our FinTech firms continue to grow and succeed."

Britain's alternative finance market is expected to be worth £1.6bn in 2014, the Treasury said.

Business Secretary Vince Cable said: "Forcing banks to refer businesses to alternative lenders is something I've been determined to make happen.

"It's good that more SMEs are making use of alternative finance but the big banks still dominate and small businesses often give up if they're turned down for finance by their bank.

"The UK needs a diverse and competitive business finance market like Germany and the US if our SMEs are to thrive, and that is why the Business Bank is so important.

"Money is already reaching small businesses, but my ambition for the Business Bank is to radically alter the overall market landscape."

Other measures announced included a consultation on digital communications, a review of the part technology will play in the future of the FinTech sector, a £100 million extension to investment for smaller businesses, a push to promote Britain in overseas markets and awards for those who come up with solutions to help small businesses access finance.