As expected, Eurozone finance ministers have rejected a Greek request to extend a bailout programme beyond 30 June.
A Eurogroup statement said Greece had broken off negotiations over a new bailout deal “unilaterally”.
Late on Friday, Greek PM Alexis Tsipras called a surprise referendum for 5 July over the terms of any new deal.
Greece has to pay €1.6bn (£1.1bn) to the IMF on Tuesday. Without new funds, there are fears Greece may leave the euro and its economy may collapse.
Eurogroup head Jeroen Dijsselbloem said finance ministers would reconvene to discuss the consequences of the latest developments.
They were determined “to maintain the strength and credibility of the eurozone”, he said.
It would be up to the European Central Bank (ECB) to decide whether to continue providing emergency liquidity funding to the Greek banking system, he added.
Greek Finance Minister Yanis Varoufakis said the Eurogroup’s refusal to extend the bailout could permanently damage the credibility of the group.
Mr Varoufakis said Greece had asked for an extension of “a few days, a couple of weeks”, whereas Mr Dijsselbloem said an extension of one month had been requested.
In Greece, queues have formed outside banks amid concerns that Greece’s central bank might start restricting withdrawals.
Throughout the ups and downs of the recent negotiations, Greeks have by and large resisted the urge to withdraw money from their accounts, pinning their hopes on a last minute deal with the country’s creditors.
But as the deadline for Greece’s €1.6bn payment to the IMF looms, and with Mr Tsipras calling for a referendum next week, lines have begun to form outside ATMs and bank branches in Athens.
One bank has imposed withdrawal limits of €3,000 per account, and some ATMs have handwritten “empty” signs on them – although I managed to withdraw cash at two separate locations.
Some customers were given a ticket number and told to come back in a few hours. One man told me he was 170th in line. “The game is over,” said Peter, one of those queuing. “Greece is going into uncharted waters, and the banks will be closed on Monday, I suspect.”
Anxiety is mounting in Athens. “Everybody’s really scared,” Elena, a woman in her 20s, tells me as she waits to withdraw cash. “We need to have enough money to last the week.”