Korean Peninsula tensions
A South Korean soldier walks between barricades on the Grand Unification Bridge, which leads to the demilitarised zone separating North Korea from South Korea in Paju.Reuters

South Korea is planning to raise $500bn (£320m) from its public sector in order to help North Korea prepare for any possible future reunification, the country's top financial regulator has revealed.

The Financial Services Commission (FSC) told South Korea's Yonhap news agency that an additional £500bn would be needed to bring North Korea's gross domestic product (GDP) per capita up to $10,000 after a future reunification, from its current level of $1,251.

"In the initial stage of unification, the government will lead the North Korean development by using state funds and projects, and then the ODA and private investments can be utilised," said FSC chairman Shin Je-yoon.

"We have to consider many factors, including the economic gap between the two countries and macroeconomic variables before introducing a currency system to the North," Shin added.

"The monetary integration should be decided after comprehensive discussion."

The commission added that it would invest approximately $175bn on infrastructure and industrial development.

North Korea's GDP in 2013 was $31bn, just 2% of South Korea's GDP in the same year. This divergence is much greater than that of West and East Germany before their reunification in 1990.

West Germany's GDP was 9.7 times bigger than that of East Germany. In comparison, South Korea's GDP is currently 42.5 times larger than the North's.

The two countries are still technically at war after a ceasefire brought fighting to an end in July 1953 but both North and South remain in a state of armed truce.