Last-ditch debt talks between Greece and its international creditors collapsed for the second time in less than 24 hours raising the prospect of imminent bank closures as the country spirals towards default in five days.
reece's creaking banking system is now facing the prospect of a devastating run on its assets after Athens failed to give ground on an ultimatum presented by its paymasters.
Going on holidays to Greece?
In in a three-hour aborted session of finance ministers, both sides failed to agree on a final version of a deal to report back to European leaders convening for a two-day summit
This morning Greece's Finance Minister Yanis Varoufakis said his country had done everything it could to accommodate the "strange demands" made by its creditors, and was determined to remain part of the euro zone.
But Greece would not accept any solution to its debt crisis that it considered unviable, he said in an interview with RTE radio.
Demands for tax increases and pension cuts that Greece's creditors are setting as conditions for the disbursement of aid are putting the country in an impossible position, he added.
"I am against increasing the corporate tax, but then again I am against raising the tax on hotels and against cutting the pensions of people who live below the poverty line," Varoufakis said on RTE radio.
"These issues are putting me and my government in an impossible position, having to make a bad choice among really hard, difficult bad choices."
Meanwhile, at the summit, which was billed as David Cameron's bid to kick-start his EU renegotiation ploy, leaders such as Germany's Angela Merkel and Holland's Mark Rutte, reportedly told Alexis Tsipras to "shut up" over his pleas for a reprieve over the dinner table.
Negotiations will now spill over into the weekend, raising fears that capital controls will need to be imposed as early as Monday in the absence of a deal to stave off a debt default on June 30.
Amid the acrimony, Ms Merkel accused Greece of taking "regressive" steps, warning that Berlin would not be "blackmailed" by the debtor's demands, she told her MEP's.
“We have not made the necessary progress. In some areas one even gets the impression that we have moved backwards," said Ms Merkel.
The German premier is pushing for a solution by Sunday at the latest, to ensure markets do not spiral into chaos on Monday morning.
Eurogroup president Jeroen Dijsselbloem said there was still "a wide gap with the Greek authorities" but the "door is still open for the Greek authorities to accept the proposals tabled by the institutions".
Greece must find €1.6bn to pay off its latest loan installment to the International Monetary Fund on June 30. Any eleventh hour agreement would not come in time to release the €7.2bn in bail-out cash owed to the country, but could lead to the European Central Bank releasing a €1.9bn tranche of funds earmarked for the cash-strapped government.
But the IMF continued to take its hard line on the Leftist government, escalating its threats to revoke a 30-day grace period it could allow the debtor in the event of a missed payment.
The IMF's board would be notified "promptly" of a missed payment, said IMF spokesman Gerry Rice. Such a move could trigger a range of cross default clauses, pushing Greece towards a euro exit.
The Fund, however, denied it had presented Greek Prime Minister Alexis Tsipras with an ultimatum deal.
"The IMF doesn't do 'take it or leave it'. That's not how we work with our member countries, it's always give and take," said Mr Rice.
Following another marathon day of talks with his bail-out chiefs, Mr Tsipras was handed a revised list of measures the Troika are demanding in return for emergency cash.
Sticking points continued to centre around Greece's tax and pensions system.
In the new plan, lenders made concessions not to raise VAT on electricity and basic foods, but are still demanding an abolition of special tax privileges for the country's islands.
As Greece's senior creditor, the IMF is sceptical about the government's ability to raise revenues through tax collection and is pushing for a radical overhaul of its pensions system.
Greek finance minister Yanis Varoufakis sent back his government's new measures, half an hour before talks in the eurogroup were due to begin.
"We were given a proposal by the Greek parties at the last hour," said IMF chief Christine Lagarde, who said lenders needed more time to consider the proposals.
"We really want to show flexibility and we want to be as growth friendly as possible and we want to work. But it has to be balanced."
Mr Varoufakis said his partners remained divided on what they were willing to concede, saying that "several colleagues disagreed and criticised not our text but also that of the institutions".
"We decided as a Eurogroup that we should continue our deliberations."
The delay came as the ECB decided not to raise the cap on the emergency funding it is providing to keep Greece's banks alive. The ECB is reviewing the solvency of Greece's banking system on a daily basis as deposit outflows push the financial system to the brink of insolvency.
Should Greece fail to secure a bail-out extension on June 30, the ECB could pull the plug on emergency liquidity assistance (ELA), triggering a series of events that may result in capital controls and the issuance of an alternative currency.
Jens Weidmann, the head of Germany's Bundesbank, said the ECB should be ready to cut the funding, forcing Athens into a decision over whether or not to impose capital controls.
“The Eurosystem must not provide bridge financing to Greece even in anticipation of later disbursements,” said Mr Weidmann. He said recent outflows of money from Greek banks, "casts doubt on their financial solidity" - a key precondition for further central bank cash.
Eurozone finance ministers will meet for their fifth round of talks in 10 days on Saturday. The last-ditch attempt comes amid speculation that creditors are seeking to work with alternative political forces in the country to topple the Leftist government.
"It's obvious that some at home and outside are seeking the collapse of the government," Greece's Labour minister, Panos Skourletis, told state radio ERT.
"It is clear that there is this dimension too in this negotiation."
Any deal will have to be passed by the Greek parliament, most likely over the weekend, before it is put to the Bundestag.
If creditors fail to step back from their demands, the Greek parliament will not vote on any package, threatened the country's economics minister.
"If the lenders want to impose their old program, then Tsipras will not sign it and there will be no vote", George Stathakis told Süddeutsche Zeitung
Mr Tsipras held a phonecall with his president on Tuesday amid fears he will be forced to call snap elections if creditors do not budge from their demands.
Mr Tsipras said on Tuesday that the intransigence "conceals one of two possibilities: either they don’t want an agreement or they are serving specific interest groups in Greece.”