Upon the introduction of the new law on regulating public debt of the FRY aris- ing from citizens’ foreign exchange savings, the Republic of Serbia issued EUR 4176 bonds of series A on August 19, 2002. The trading volume in the first six months was around EUR 100 million. During that period the annual yields varied from 13% to 14% for short-term bonds, and from 8% to 15% for long–term bonds. As we will show later, the yield curve was inverted from the very beginning of trading, which could be explained by the additional use of bonds as a means of payment in the privatiza- tion process
