South Korea is working on contingency measures against possible increased volatility in financial markets as Greek people have turned down international creditors' austerity measures in a high-profile referendum, a high-ranking official said Monday.

On Sunday, more than 60 percent of Greek voters rejected tough bailout terms, triggering concerns over a "Grexit" from the eurozone.

"We are working on a contingency plan as the likelihood of a Grexit has been bolstered, which would have a considerable impact on stock and foreign exchange markets," said Choi Hee-nam, deputy minister of international affairs at the finance ministry.

Market experts said any impact from the Greek referendum would be short-lived and not be far-reaching compared with the past fiscal crisis in southern Europe.

In South Korea's case, its limited exposure to Greece, together with its financial soundness, make it less vulnerable to the Greek crisis.

Local banks and non-bank institutions' exposure to Greece stood at US$1.18 billion as of end-March, accounting for 1.3 percent of the country's total overseas lending, according to the Financial Supervisory Service .

The result of the referendum is widely expected not to have a direct impact on the local market, offset by other domestic factors, such as the central bank's latest rate cut and an extra budget put forward by the government.

But going forward, South Korea is not insulated from the potential Grexit as European banks may pull their money out of South Korea amid continued chaos in Greece, government officials said.

The Bank of Korea also held an emergency meeting Monday to discuss what impact the Greek vote will have on the local financial market.

"We are keeping close tabs on the possibility of increased volatility in the currency and bond markets," a BOK official said.

"Measures will be taken to stabilize the market should it become
more volatile." (Yonhap)