A ‘ring fence’ or ‘ring fencing,’ which was the type of a technical contract condition in financial transaction, is now often considered as a regulatory solution for problems in banking & finance and public utilities. The functions and conceptual foundations of ring-fence can be well founded in the Vickers Report of England and the Volcker Rule of the U.S. In regulatory perspective and context, the term ring fence can best be understood as legally deconstructing a firm in order to reallocate more optimally and reduce risk. If a ring-fence is utilized as one of regulatory vehicles, therefore, it can help to protect certain publicly beneficial activities performed by private-sector firms, as well as to mitigate or reduce systemic risk and the too-big-to-fail problem inherent in large financial institutions. In perspective of Korea, a ring fence could also be regulatory solution to a wide range of financial and business problems, but could be admitted in Korea a little differently from the Vickers Report or the Volcker Rule since Korean banks and financial market including capital and investment are not such mature enough to compete with foreign large banks in international markets and they are not ready yet to be deconstructed. It is noted, however, that the ring-fence regulation might inadvertently undermine efficiency and externalize costs if it is not structured carefully in its application to Korean banks.