Euro zone gives Greece until Sunday for debt deal

“The stark reality is that we have only five days left to find the ultimate agreement”.

Underscoring the gravity of the challenge, European Union President Donald Tusk chose to call all 28 European Union leaders to Brussels, saying the crisis “is maybe the most critical moment in our history”.

“Guarded optimism is the theme today, as the eurozone gives Greece one final deadline”, said Chris Beauchamp, senior market analyst at IG in London.

Merkel said she was “not exaggeratedly optimistic” for a solution.

Tsipras, who was elected on an anti-austerity platform, stunned observers by calling for a referendum on Europe’s last bailout proposal, which was already off the table by the time of Sunday’s vote.

The Greek government has extended bank closures and a 60 euro($66) daily limit on ATM withdrawals until Monday, media reported on Thursday.

Tsipras came buoyed by a triumph in last Sunday’s referendum, where an overwhelming majority of Greeks backed his call to reject the belt-tightening reforms that creditors had last proposed.

The Greek leader declared that he was not seeking a “rupture” with Europe but rather a “socially just and economically viable agreement without the mistakes of the past, that caused a recessionary spiral”. “The process will be extremely fast”.

But he also insisted that any deal should include debt relief, and he emphasized that the Greek crisis was essentially a European problem.

Greece has made a formal request for a new three-year financial rescue package and pledged to reform its taxation and pension systems, although any attempt to prevent a “Grexit” may have to overcome a difference of opinion between France and Germany.

Greece’s leftist government led by Prime Minister Alexis Tsipras has put debt reduction at the heart of its negotiations with the euro zone for further finance in return for reforms. “A deal absolutely must be [made] on Sunday because it will be too late after that and the consequences will be serious”, he told French radio, adding that “there could be riots… and chaos in the country”.

Spanish Prime Minister Mariano Rajoy also said of Greece: “The tune has changed, it’s not what we were hearing until now and that’s positive”.

Noyer’s warning came a day after European leaders held an emergency summit in Brussels to try to thrash out a deal to stop Greece crashing out of the euro.

European Commission president Jean-Claude Juncker yesterday admitted: “We have a Grexit scenario, prepared in detail”.

“Central banks, although they have the means, have no mandate, in my view, to safeguard the solvency of banks and governments”, Mr. Weidmann said, as stated by a text of his remarks.

Some of Athens’ 18 partners in Europe’s common currency expressed exasperation at five years of crisis wrangling with Greece.

“With the Greek government it is every time manana”, Lithuania’s President Dalia Grybauskaite said using the Spanish word for tomorrow.

Greece has been granted two bailout programs worth a total of $266 billion in loans from other eurozone countries and the global Monetary Fund.

“We still do not have the basis for negotiations”, she said at the summit.

“The Tsipras government has purposefully ruined Greece’s economic growth and led it back to recession, thus leaving the country to ruin, ” the Latvian finance minister added.

“It’s (a deal) still not impossible especially if the Greek government comes up with a new proposal and does not insist on a nominal haircut on the debt but accepts lengthening of the maturities”, said Johannes Mayr, economist at BayernLB.

(AFP) Greece asked for a new worldwide bailout on Wednesday as Prime Minister Alexis Tsipras said he was confident debt-stricken Athens could meet a weekend debt deal deadline to stay in the euro.

One big sticking point in the talks is Greece’s demand that the terms of its bailout loans be made easier.