The report, published by South Korea's financial regulator, the Financial Supervisory Service, said Seoul and Beijing need to jointly invest in a policy bank in North Korea to help Pyongyang raise funds for development projects.

There are believed to be no commercial or policy banks in North Korea, with the North's central bank playing those roles, according to the report.

If China, North Korea's biggest trading partner, joins hands in setting up a policy bank in Pyongyang, it would minimize investment risks, the report said.

The report also suggested that South Korea could set up a branch of a commercial bank in North Korea or the two sides could establish a joint commercial bank.

In Washington on Sunday, US Secretary of State Mike Pompeo told Fox News that Washington offered to allow the American private sector to invest in North Korea if the North agrees to fully dismantle its nuclear weapons program.

"This will be Americans coming in -- private sector Americans, not the US taxpayer -- private sector Americans coming in to help build out the energy grid. They need enormous amounts of electricity in North Korea," he said in an interview with Fox News.

Still, Pompeo's comments indicated that the two sides need to move forward to resolve details on how to go about dismantling North Korea's nuclear weapons program. (Yonhap)