Seoul: South Korea needs to step up regulations to prevent another financial crisis and develop foreign exchange markets to deal with sudden capital flows, a senior central bank official said Sunday.

The country also needs to have a "proper level" of foreign exchange reserves, said Kim Kyung Soo, the head of the Bank of Korea's Institute for Monetary and Economic Research.

"It is necessary to secure a macro prudential policy and strengthen regulations in order to prevent a recurrence of a financial crisis," Kim said in an abstract of a thesis, which he worked on with an International Monetary Fund researcher.

Kim did not provide details on which financial regulations the country needs to toughen up.

"The issues should be discussed further in an international body such as G20," he told Reuters by telephone, adding other countries also need to strengthen regulations.