Pros and cons of ringfencing
The main advantage of ringfencing is protecting designated assets from things like market risk, taxation, and even insolvency or seizure. In theory, it also keeps the financial system much more sound, since certain assets should always be safe from economic volatility. This way, if a bank falters, for example, it's far less likely they will fail entirely and require taxpayers to assist them in digging back out.
However, some argue that ringfencing assets leads to less oversight, not more, and that can weaken risk management instead of strengthening it. It can also be harmful to tax jurisdictions, since one tactic for very large banks is simply to move money offshore, where it can't be taxed and isn't contributing to more local economies.