The recent issue of a retail bond for Slovenian residents - subscriptions ends on 16 February - is a welcome move since there have been too few investment opportunities like this in the past, says Aljoša Valentinčič, a professor at the Ljubljana School of Business and Economics. But he thinks there is still room for improvement.

The three-year, €250 million issue popularly referred to as a people's bond comes with a 3.4% interest rate, significantly above what banks currently offer on deposits, and is designed to jolt the capital market into action and redirect some savings from banks to the capital market.

Valentinčič describes the issue as an important step forward for the development of the capital market and in terms of the personal finances of those who will buy them.

"We have seen that the interest of Slovenian savers in certain traditional financial instruments is relatively limited and that we do not have enough such investments. As a result, the prosperity of everyone - individuals, companies and the state - is suffering," he told the Slovenian Press Agency (STA).

He thinks it is understandable that the bond will be more attractive to older investors, who typically have more savings as well as more financial knowledge and awareness about the downsides of not investing.

"And yet, we're missing youths. I hope the state learns something from this issue and makes future plans bearing in mind youths," he says. This will require different communication and the simplification of administrative procedures.

To entice investors, any capital gains under €1,000 derived from the bond will be exempted from capital gains tax, which means individuals can invest up to about €30,000 to avoid being taxed.

Valentinčič thinks the ceiling should have been set higher.

As for the 3.4% interest rate, he says it is fairly favourable for such an instrument, "in particular when one considers the risk involved."

The interview was conducted as part of EF Studio, a joint project between the STA and the Ljubljana School of Business and Economics.