Greece must service €14.5 billion of debt on March 20 and,...

Greece must service €14.5 billion of debt on March 20 and, before EU-IMF cash can flow into its accounts, persuade private creditors of the country, mainly banks, insurance companies and funds, to give up on 70 per cent of their claims.

"The private sector involvement takes at least four weeks to issue the prospectus and to get subscribers, and without a deal on Monday then time will run out in March," said an EU diplomat.

Rumours are already circulating in Wall Street that banks are preparing for a "credit event" - a technical term used by credit agencies to mean a default - in the days immediately following March 20, as Greece looks likely to be unable to meet its debts.

The sense that an endgame is approaching has been fuelled by the secret "troika" report, by EU, IMF and ECB officials on Greek debt "sustainability".

It found that even if Greece implemented all the austerity measures expected of it, and if it achieves highly optimistic economic growth targets, it will still fall short of what is needed, with debt likely to total 129 per cent of GDP in 2020.

But the European Central Bank and the Eucopean Commission are, for now, lining up with Mrs Merkel to push for the rescue attempt to continue, fearful that the financial tsunami that would be unleashed if it failed would swamp the eurozone.

Mr Schäuble maintains that since Greece is already regarded by the financial world as bankrupt, a formal bankruptcy would have no negative consequences for other euro members