The meeting of euro-area finance ministers was tense from the outset after weekend talks in Brussels failed to establish common ground. The 19-nation shared euro fell 0.4 percent to $1.1343 at 7:54 p.m. London time after the talks broke up, having climbed as much as 0.3 percent earlier on Monday.

“As talks collapse at the Eurogroup today, Greece finds itself now closer to a new bankruptcy within the Euro and potentially” leaving the currency union, Nicholas Economides, professor of economics at Stern Business School, New York University, said in an e-mail. “Greece could run out of money in March and the European Central Bank could suspend its assistance to Greek banks after Feb. 28, leading to their collapse.”

Dijsselbloem shut down the meeting when it became clear that talks were going nowhere, according to an EU official with knowledge of the talks. Afterward, the Dutch finance chief told reporters that ministers could reconvene on Friday -- but only if the Greeks file an extension request.

Ahead of the meeting, German Finance Minister Wolfgang Schaeuble said the Greeks haven’t shown enough willingness to soften their demands. He didn’t comment on the way out.

Schaeuble’s stance drew broad support, as ministers agreed Greece must ask for an extension of its existing program for talks to move forward. Even countries like France and Italy, which have been more sympathetic for Greek requests for bridge financing, said the Greek government must file a request to keep up its relationship with its creditors.

The Greeks said euro-area officials focused on the old aid memorandum “are wasting their time.” The statement continued: “With these facts, there can be no agreement today” and said the previous deal was “taken off the table” at meetings in Brussels last week.

And:

“We have one way, a reasonable way, a way which takes into account the vote of the Greek people: it’s what we call a technical extension, with flexibility and the possibility to change some elements of the previous program,” French Finance Minister Michel Sapin said after the meeting. “It’s the only reasonable way forward.”

David Fuller's view

Both sides want an acceptable deal that keeps Greece in the Euro for now.  If possible, this will probably be along the lines stated vaguely by French Finance Minister Michel Sapin, immediately above.  However, even if this can be arranged, it is unlikely to meet the unrealistic expectations of Greek voters and their new government. 

Both sides want an acceptable deal that keeps Greece in the Euro for now.  If possible, this will probably be along the lines stated vaguely by French Finance Minister Michel Sapin, immediately above.  However, even if this can be arranged, it is unlikely to meet the unrealistic expectations of Greek voters and their new government. 

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My guess is that European stock markets ease and consolidate recent gains over the next several days.  However, assuming a deal is arranged before the end of the month that keeps Greece in the EU, investors will then re-focus on the €60bn a month QE which commences in March.  That will be a very bullish stimulus. 

See also: Greece Confronts Euro-Area Skepticism on Bailout Breakthrough, and: Greek Postwar Alliances Show Europe Has More to Lose Than Money.

If Greece were to pullout or be forced out of the EU and Euro, the happiest person would be Vladimir Putin.  That should be of concern to Germany, most other European countries and also NATO.