North Korea on Monday played down South Korea's decision to join a China-led regional bank as a trade-off for the deployment of an advanced U.S. missile defense system on its soil.

On its propaganda website, Uriminzokkiri, the North claimed the U.S. will take a full-fledged step to send a Terminal High Altitude Area Defense  battery to the peninsula as quid pro quo for allowing Seoul to become a member of the Asian Infrastructure Investment Bank.

After months of internal debate, the South's government announced its decision last week to participate in the envisioned AIIB which Washington apparently views as part of Beijing's efforts to expand its influence.

On its part, the U.S. is considering deploying the THAAD system in South Korea, citing growing military threats from the nuclear-armed North.

Chinese officials believe Washington is actually seeking to curb Beijing's clout.

The AIIB and THAAD issues represent a grim reality facing South Korea sandwiched between its top ally and major economic partner next door.

The North said the U.S. is ratcheting up pressure on Seoul for the deployment of THAAD after letting it join the AIIB.

If the THAAD is deployed on the peninsula, it added, the South and the U.S. will face serious consequences of war risks and an arms race. (Yonhap)