Eurozone and Greece at historical crossroads

GREECE will hold on July 5 a referendum on whether to approve a package of reforms and fiscal measures proposed last week by its creditor institutions - the European Commission, the European Central Bank (ECB) and the International Monetary Fund (IMF). The decision to hold the vote represents a monumental gamble by the Greek government with the country now facing its most critical moment since at least 1974 following the collapse of military rule and the restoration of democracy.

While Greece remains the epicentre of the crisis, tensions are building across the eurozone too. The economic and monetary union now faces its most difficult moment since the euro was introduced in 1999 with Austrian Finance Minister Hans Joerg Schelling asserting that Greek exit from the currency is "almost inevitable".

On Sunday, the ECB announced it was maintaining the emergency liquidity support on offer at Friday's limit of 89 billion euros (S$133.2 billion), but that it will not provide extra financial assistance beyond this. This decision puts significant additional pressure on Greece given that no extra funding will be given by the ECB to replace those funds which flowed out of banks at the weekend.