A senior official said the U.S. Federal Reserve's decision to start tapering its bond purchases will have a limited impact on South Korean financial markets.

First Vice Finance Minister Lee Eog-weon issued the assessment on Thursday in a government meeting in Seoul.

Lee said the Fed has launched tapering, but the pace and scope were in line with market expectations, so the international financial market took the decision without a hitch. 

Tapering refers to the policy of unwinding the massive purchases of Treasuries and mortgage-backed securities adopted by the Fed since the outbreak of COVID-19.

The vice minister said the government will closely monitor the tapering and the movements of monetary authorities of major economies, and prepare to take swift measures if necessary to stabilize the local market. 

He added that the finance ministry will buy back two trillion won in government bonds Friday in an effort to deal with increased volatility in the bond market.