EU leaders have warned Greeks that rejecting creditors’ proposals in a snap referendum called for Sunday would mean leaving the euro.
German Finance Minister Sigmar Gabriel said the vote would be “yes or no to the eurozone”.
Greek Prime Minister Alexis Tsipras has urged a no vote but insists he wants Greece to stay in the euro.
Talks between Greece and its creditors broke down last week, leading to Greek banks having to shut this week.
Global stock markets saw big falls on Monday after the weekend’s events.
As well as Mr Gabriel, the leaders of the eurozone’s other two largest economies said Greek voters would effectively be deciding whether or not they wanted to stay in the eurozone on Sunday.
Italian Prime Minister Matteo Renzi said the choice would be between the euro and the drachma, while French President Francois Hollande said “what’s at stake is… knowing whether the Greeks want to stay within the eurozone”.
The UK’s Chancellor of the Exchequer, George Osborne, said a Greek exit would be “traumatic” and Britain should not underestimate the knock-on effects.
He said UK retirees who live in Greece would continue to receive their pensions, but advised British holidaymakers to take more euros than usual.
Days of turmoil
- Friday evening: Greek prime minister calls referendum on terms of new bailout deal, asks for extension of existing bailout
- Saturday afternoon: Eurozone finance ministers refuse to extend existing bailout beyond Tuesday
- Saturday evening: Greek parliament backs referendum for 5 July
- Sunday afternoon: ECB says it is not increasing emergency assistance to Greece
- Sunday evening: Greek government says banks to be closed for the week and cash withdrawals restricted to €60
Earlier, European Commission President Jean-Claude Juncker said he felt “betrayed” by the “egotism” shown by Greece in the failed talks on giving heavily indebted Greece the last payment of its international bailout.
He said Greek proposals were “delayed” or “deliberately altered” but added the door was still open to talks.
Despite the public war of words, a Greek official said Mr Tsipras had spoken to Mr Juncker on Friday and asked him to extend Greece’s bailout until the referendum.
A critical deadline looms on Tuesday, when Greece is due to pay back €1.6bn to the International Monetary Fund – the same day its current bailout expires. There are fears of a default and a possible exit from euro.
Mr Juncker said that he still believed a Greek exit from the euro was not an option and insisted that the creditors’ latest proposal meant more social fairness.
The question which will be put to voters on Sunday will not be as simple as whether they want to stay in the euro or not – instead it asks Greeks to approve or reject the specific terms laid out by Greece’s creditors:
“Should the agreement plan submitted by the European Commission, European Central Bank and the International Monetary Fund to the June 25 eurogroup and consisting of two parts, which form their single proposal, be accepted? The first document is titled ‘Reforms for the completion of the Current Program and Beyond’ and the second ‘Preliminary Debt Sustainability Analysis’.
On Saturday, the European Central Bank (ECB) decided not to extend emergency finance to the Greek banks, after the breakdown of talks on giving heavily indebted Greece the last payment of its international bailout.
The current ceiling for the ECB’s emergency funding – Emergency Liquidity Assistance (ELA) – is €89bn (£63bn). It is thought that virtually all that money has been disbursed.
Following the ECB announcement, Greece said its banks would remain shut until 6 July. Cash machines are now reopening, but customers can withdraw only limited amounts.
Transport Minister Christos Spirtzis announced that public transport will be free in the Athens area for a week while banks are closed.
The euro lost 2% of its value against the the US dollar in market trading on Monday before recovering some ground. Government borrowing costs in Italy and Spain, two of the eurozone’s weaker economies, have also risen.
The Athens stock exchange is closed as part of the emergency measures.
‘Resorting to barter system’
Athens resident Ilia Iatrou says the situation is “unbearable”.
“My mother-in-law queued up for over an hour at the cash point just to be able to withdraw a small amount of money.
“I haven’t tried to go to the cash machine myself, as we don’t have much money left.
“My neighbours and I have now resorted to a sort of barter system among ourselves because we have no money left.
“We can’t take any more of this, so we have to keep saying no to the EU masters.
“The EU can’t afford to let us fail so we should continue to say no and they will blink and give us a better deal.”