China’s central bank has declared illegal all transactions involving bitcoin and other virtual currencies, stepping up a campaign to block use of unofficial digital money.

The price of bitcoin fell more than 8% immediately after the announcement, dropping to just over $41,000 (£30,000).

Chinese banks were banned from handling cryptocurrencies in 2013, but the government issued a reminder this year. That reflected official concern that cryptocurrency mining and trading might still be going on, or that the state-run financial system might be indirectly exposed to risks.