At 11pm on Tuesday evening, Greece is on course, formally, to miss its deadline to stump up €1.6bn (£1.1bn) in debt repayment to the IMF, pointing the way to a possible departure from the single currency.
Here's what could happen next...
Q | Why is today the moment of truth for Greece?
A | Athens is due to pay the IMF €1.6bn at 6pm Washington time (11pm BST) but it doesn’t have the cash. Unless a miracle occurs, Greece will today become the first developed country in history to fail to repay money owed to the IMF.
Q | What does this mean for Greece and the eurozone?
A | Greece will also today become the first eurozone country to miss a sovereign repayment. In addition, Greece’s €240bn bailout agreement officially expires tonight – with nothing to replace it. If the Greek banking system is faced with meltdown, many experts think the country will ultimately leave eurozone.
Q | Why are the financial markets not panicking?
A | Most investors and traders appear to think the mess is unlikely to create financial “contagion” in the rest of the eurozone. This is partly because European banks and investors have been steadily reducing their exposure to Greece over the past five years.
Q | What happens next?
A | Even if the ECB does not cut off Greek banks, it is likely to come under massive pressure to do so on 20 July when Greece is due to redeem €3.5bn of sovereign bonds held by the ECB itself.
Q | Does it mean Greece will leave the euro?
A | Not necessarily. Even if Greece defaults and reintroduces its own currency, there is no automatic procedure for ejecting it from the single currency. Yet if it were unable to tap funding from the European Central Bank and was using its own parallel currency, Greece would be gaining little benefit from euro membership.