South Korea's top central banker has warned against a potential liquidity crisis for local firms stemming from the recent U.S. rate hike, while urging his country to speed up restructuring.

Bank of Korea Gov. Lee Ju-yeol has repeatedly insisted any shock from a U.S. rate hike on the local economy will be limited, citing the country's strong economic fundamentals.

While meeting with reporters late Wednesday, the BOK chief reiterated that the impact from a U.S. rate hike on the whole economy will be limited, but noted the situation might be quite different for local firms.

"They say chances of the country facing a debt crisis are very slim, citing our strong fundamentals and healthy foreign exchange reserves that have increased by a large margin," Lee said.

"However, what we must be aware of is the fact that the holder of foreign exchange reserves is the government and not local firms.

I worry there might be limits to our ability to minimize the impact on companies stemming from a debt crisis in other countries," he added.

The BOK governor has previously said a U.S. rate hike may cause a liquidity crisis in newly emerging market countries that are especially weak financially.

The U.S. Federal Reserve raised its key rate by 25 basis points last week in what many, including Lee, see as the start of a gradual but sure succession to follow that may further speed up an outflow of foreign capital from newly emerging markets down the road.

Lee said the best way to prepare for problems arising from the U.S. rate hike and changing global economic conditions was to transform the country's industrial structure and weed out ailing firms.

"We have again and again stressed that the best way to avoid slow growth and prevent our economy from entering an extended period of low inflation is to restructure," he said. "We will do our best to help create a stable environment where the government's restructuring efforts can be best pursued." (Yonhap)