The article outlines the issues of market discipline - that is the private monitoring and
oversight over banks. Market discipline is considered to be an important component of the
supervisory system, which can significantly influence the stability of individual institutions, as well
as the whole banking system. The paper presents the theoretical considerations about private
monitoring and the possibilities of its widespread application. The recommendations of Basel
Committee on Banking Supervision are discussed. The discussion of conditions for the limits and
the conditions for effective market discipline is the complement for those considerations.