South Korea's central bank has decided to temporarily expand the list of accepted collateral for loans to commercial banks in a bid to help ease a credit crunch. 

On Thursday, the Bank of Korea(BOK) announced that it decided to include bank debentures and debt issued by nine state-run companies on a list of accepted collateral for loans.

The expansion will be effective for three months starting from November 1, as the central bank aims to help domestic banks secure up to 29 trillion won in high-liquidity assets.

Although the only accepted collateral by the BOK is usually premium bonds such as government bonds and monetary stabilization bonds, the central bank is aiming to calm a local bond market rocked by the unexpected debt default by the municipal-linked developer of Legoland Korea.