Covid-19 has resulted not only in a health crisis but has also presented enormous economic challenges for Europe. The European economy is heavily reliant on the financial health of its banking system, with European banks providing around 70% of corporate and 90% of household financing—double and triple the proportion seen in the United States, where financing is heavily reliant on capital markets; write David Zahn, head of European fixed income, and Tom Petersson, European financials research analyst, at Franklin Templeton.