English Abstract: The report analyses the dynamics of financial markets in the first half of 2021, highlighting the main vulnerabilities in the context of the crisis triggered by the pandemic in Europe and the development of sustainable finance and crypto assets at a global level. The Report includes eight sections. Section 1 shows the impact of the crisis on economic activity. Section 2 analyses the monetary and fiscal policy measures adopted by national and European authorities to tackle the negative effects of the crisis. Sections 3 and 4 examine equity and bond market trends, respectively. The next three sections analyse the impact of the crisis on non-financial corporations, banks and households. The last Section reports the main trends in the mutual fund industry.During the first half of 2021, in developed countries progress in Covid-19 vaccination campaigns, the loosening of anti-pandemic restrictions, and economic policies adopted to counter the crisis helped restore confidence in the improvement of economic situation. In June, however, the spread of the Delta variant fuelled renewed uncertainty, also in view of the developments relative to the completion of the vaccination cycle (in Italy al the end of July, about 60% of the population was immunized). Economic activity is expected to recover over the year, albeit to different degrees across areas and countries. In the Eurozone, whose growth is estimated to be lower than global growth, Italian GDP is expected to return to its pre-crisis levels only in 2022, after Germany and France. Meanwhile, the pandemic triggered risk factors that add to pre-existing vulnerabilities. In particular, the level of both public and private debt increased. Domestic fiscal policies to support the economy led to a significant deterioration in public finances. In addition, household and corporate debt rose. In Italy, the ratio of public debt to GDP is expected to reach a level significantly higher compared to the Eurozone average at the end of 2021 (159% and 102%, respectively), while the ratio of private debt to GDP, although on the rise, at the end of 2020 remains well below the average values observed in other countries. Financial markets are easing recovery. As for equities markets, in the euro area, along with the positive trends there are signs of a possible misalignment between market valuations and the fundamental values of listed companies, less marked in the banking sector compared to the non-financial sector as well as less pronounced in Italy compared to that estimated for the Eurozone. As for non-equity markets, both primary and secondary markets of sovereign bonds keep experiencing tranquil conditions. With regard to corporate debt securities, in 2020 net issuance of bank bonds fell to zero, reaching the lowest level of the decade, while those of non-financial companies remained at positive levels. On the secondary market yields remain low, although on the rise with respect to the end of 2020. Due to pandemic, over 2020 large non-financial listed companies recorded a sharp drop in revenues and, overall, a worsening in income and financial conditions. Therefore, vulnerabilities of major listed firms heightened compared to the previous year. The share of companies with income and financial indicators worsening compared to their ten-year average has in fact increased. Overall, the most resilient large companies in terms of income, leverage and liquidity represent less than 4% of the total in Italy and less than 5% in Europe. During 2020, banks in major European countries experienced a decline in income margins and, on the other hand, an improvement of capital adequacy. In Italy, major listed banks recorded an increase in the core tier 1 ratio of around two percentage points compared to 2019. Credit quality also improved. For major Italian banks the ratio of non-performing loans to the total fell from 7% to 4%, as a consequence of significant loan sales. However, banks remain exposed to the risk of a deterioration in asset quality, due to the weak economic environment, especially with respect to exposures to sectors hit hard by the crisis. Between 2019 and 2020, the gross savings rate of Italian households, while remaining below the Eurozone average, experienced a sharp increase (from 10% to 18%) that should only be partially reabsorbed in the current year. Thanks also to the dynamics of stock and bond prices recorded in the financial markets in the second and third quarters of 2020, the net wealth of Italian households grew, although remaining below figures for Germany and France. As for the composition of financial assets, the weight of liquidity increased, which at the end of 2020 recorded a YoY change at its highest level since 2015 (+7%), in line with the dynamics observed in the euro area. At the end of 2020, liquid assets in portfolio of Italian households amounted to more than €1,500 billion, equivalent to about 91% of GDP and 2.5 times the total capitalisation of the MTA and AIM Italy (€600 billion and €6 billion respectively). Trading activity on financial instruments by Italian retail investors has intensified from 2020 onwards, particularly in equities and mutual funds. In March 2020 alone, while equity markets were experiencing severe turbulence due to the health emergency, the amount of net stock purchases hit about €3 billion, compared to the 2019 monthly average of net sales amounting to €470 million. In recent years, interest in crypto assets has grown significantly, especially among the youngest, as shown by available data on the number and age distribution of users globally. In particular, in 2021, the prices of cryptocurrencies rose significantly, including Bitcoin, which has the largest market share in terms of total capitalisation. Similarly to all cryptocurrencies, Bitcoin is characterised by a very high marked volatility, which is significantly higher than that of traditional investment options. A further critical issue is related to the way cryptocurrencies are traded and the underlying technologies. Transition to a sustainable development model is a top priority in the agenda of policy makers. One of the pillars of the Recovery and Resilience Facility (RRF), the main instrument of the Next Generation EU (NGEU) programme, is green transition, as at least 37% of expenditure has to be related to climate and other environmental objectives. In addition, as part of the announced diversified financing strategy on the capital market of NGEU, the European Commission announced that at least 30% of the total bond issues will be green bonds. This measure will help boost the market of green bonds, whose issuance in the first half of 2021 more than doubled compared to the same period last year, thanks to sovereign issuers. Within such framework, Europe has long played a leading role, with new bond issues accounting for around 60% of the global aggregate as of June 2021. Italy, whose contribution remains lower than that of the major European countries, nevertheless shows a considerable increase. Europe is also a major contributor to the development of the ESG fund sector: as of March 2021, there were some 3,500 European funds, with total assets amounting to more than €1,600 billion (over 80% of the global figure). A similar trend can be observed in Italy, where at the end of the first quarter of 2021 the number of ESG funds stood at 1,210 (517 at the end of 2020), while the assets promoted reached €276 million (81 at the end of 2020). The issue is of great importance for the banking system too, which, in response to pressure from regulators and supervisory authorities, is called upon to assess its exposure to sectors vulnerable to physical and transition risk, linked respectively to climate changes and to possible corrections in market values of assets triggered, for example, by restrictive regulation hitting sectors with higher levels of CO2 emissions.Italian Abstract: Il Rapporto esamina le dinamiche dei mercati finanziari nel primo semestre del 2021, evidenziando le vulnerabilità manifestatesi nel contesto della crisi innescata dalla pandemia, e approfondisce alcuni profili relativi allo sviluppo della finanza sostenibile e alle cripto attività. Il documento si articola in otto sezioni. La Sezione 1 illustra l’impatto della crisi sull’attività economica