South Korea's central bank said Tuesday that it has set up a system meant to detect overseas financial instability at an early stage in the latest move to better cope with any possible external shock that could affect Asia's fourth-largest economy.

The Bank of Korea said about 40 staff members will gather information to assess and analyze the resilience and vulnerabilities of the financial system by meeting with relevant officials of financial institutions, international organizations and major central banks, as well as scholars.

A BOK official said there is a need to detect risk factors in a pre-emptive manner so it can have sufficient time to analyze data and various reports.

Last year, the central bank also set up a market intelligence system to collect information on financial markets. This emulates systems operated by central banks of advanced economies.

South Korea -- a small open economy -- heavily depends on exports and foreign capital investment for its economic well being. This, however, makes Seoul more vulnerable to external shocks. South Korea has been closely monitoring movements in international financial markets to prevent a financial crisis similar to the one that hit hard South Korea in 1997. (Yonhap)