Greece warned it must produce credible proposals on debt crisis

Mr Tsipras is set to reveal fresh proposals to creditors that he hopes will kick-start negotiations. He needs the bailout talks to make rapid progress so Greece can get access to money that will prevent the banks going bust and safeguard the country’s euro future.

Greece’s financial distress became more acute late yesterday when the European Central Bank refused to increase assistance for Greek banks, which are not due to reopen until Thursday.

A hastily arranged meeting of eurozone finance ministers, which will be Euclid Tsakalotos’s first as Greek finance minister, is set for the afternoon. A full summit of leaders will then follow.

There were few signs of movement in the run-up to Tuesday’s meeting.

European Commission president Jean-Claude Juncker tempered expectations of a swift solution.

“Were we to come up with a solution today, it would be an overly simplistic solution,” he told European politicians in Strasbourg, France. “What we’re going to do today is talk to each other, understand each other, show tolerance to each other and restore order to the situation.”

The upcoming meetings follow Mr Tsipras’s bigger than expected win in Sunday’s bailout referendum, when 61% of Greek voters rejected the measures creditors had proposed in exchange for loans.

In a sign he may be willing to compromise, Mr Tsipras appointed a new finance minister to lead talks with creditors.

Mr Tsakalotos, a 55-year-old economist, has replaced Yanis Varoufakis, who constantly clashed with his peers.

“I won’t hide from you that I am very nervous and very anxious,” Mr Tsakalotos said after being sworn in yesterday. “I am not taking over at the easiest moment in Greek history.”

Greek banks are running out of cash even after the government placed limits on how much depositors can withdraw.

Normal commerce is now impossible in Greece. Small businesses, lacking use of credit cards or money from bank accounts, were left to rely on cash coming from diminishing purchases from customers. But Greeks are holding tightly on to what they have. And suppliers are demanding that businesses pay cash up front.

Spanish prime minister Mariano Rajoy said that if Greece is to remain part of the eurozone, it needs to enact reforms that will spur economic growth and pay off its debt.

“We’re inclined to help Greece but Greece must follow Europe’s rules,” he said in an interview on Spain’s Telecinco evening news programme.

Mr Tsipras has previously indicated he is willing to raise taxes and cut some spending provided the country gets some debt relief.

“The prime minister is ... committed to starting a fundamental debate on dealing with the problem of sustainability of the Greek national debt,” a Monday statement signed by the government and three pro-European opposition parties said.

Greece, after years of crippling recession and spiralling unemployment, has already been granted 240 billion euros (£170 billion) in loans from other eurozone countries and the International Monetary Fund. But the spending restraint demanded as a condition for the loans hit growth, and reforms have been slower than hoped.

European officials remain split on Greece’s demand for easier debt repayment - with lead eurozone lender Germany still reluctant.

James Nixon, chief European economist at Oxford Economics, said there is “a narrow trajectory from here that sees an emboldened Greek parliament accepting the need for reform in return for a debt write-down”.

“The next 48 hours will be crucial.”

Jeroen Dijsselbloem, the eurozone’s top official, said the pressure is on Greece to come up with fresh economic proposals that meet the requirements of its partners in the single currency bloc.

Arriving for talks with his peers in the 19-country eurozone, Mr Dijsselbloem said the Greek government has “a major interest” in bringing forward “serious and credible” proposals that are needed if Greece is to get another bailout.

Greece is running out of time to secure a deal that will help its banks reopen and avoid a disorderly euro exit.

The eurogroup president also said the resignation of Yanis Varoufakis, Greece’s outspoken finance minister over the past few months of the protracted bailout discussions, would not necessarily make a difference. Mr Varoufakis has been replaced by the more mild-mannered Mr Tsakalotos.

“It is not about persons,” Mr Dijsselbloem said. “It is about where we stand after the No referendum.”

German finance minister Wolfgang Schaeuble said Berlin still opposes an actual debt cut for Greece as he arrived at the meeting.

Mr Schaeuble said he is waiting with interest to hear the ideas of the Greek government but stressed that without an aid programme, there is “no possibility to help Greece within the framework of the eurozone”.

Germany is reluctant to consider a debt cut for Greece. The Greek government wants debt relief for the country to be near the top of bailout discussions. That does not necessarily mean an actual reduction in the amount owed - it could take the form of extending the country’s repayment schedule.

Mr Schaeuble said actual debt cuts are banned under European rules.

Irish finance minister Michael Noonan said Greece should do something relatively simple to turn things around: take a look at his nation.

Arriving at the emergency meeting of eurozone finance ministers to discuss the Greek crisis, Mr Noonan said Ireland was able to work with its debt load to make it more manageable.

He suggested Greece could also come forward with debt proposals, even if they would be different from Ireland’s.

“There is not a one-size-fits-all that we are looking at,” he said.

For many, Ireland is the poster child of the austerity prescription laid out by bailout creditors over the past few years.

Ireland is forecast to post the strongest economic growth in the 28-nation EU this year.

The new Greek finance minister has not presented fresh written proposals over how to win support for a financial bailout, according to eurozone sources.

Mr Tsakalotos gave an oral update of the financial situation in Greece instead, the sources said.

He had been widely tipped to present reform proposals in written form.

The meeting of the 19 eurozone finance ministers has ended and the body’s top official, Mr Dijsselbloem, is due to issue a statement shortly.

A number of finance ministers left the meeting without speaking to reporters.