Hundreds of people have rallied in London to show solidarity with Greece and argue that the country's debt should be forgiven.
Protesters in Trafalgar Square held up letters spelling "Drop Greece's Debt" and included left-wing lawmakers, trade unionist activists and Greeks worried about the crisis in their homeland.
"I feel really sorry for the changes that have been made over the past six years, and I don't think the programs of the IMF will make it any better," said Chatzikyriakiclis Pencles, a 24-year-old teacher.
Green Party legislator Caroline Lucas called for an end to austerity and said the Greek crisis was a human-made disaster "deliberately designed behind closed doors in Brussels."
Greek Prime Minister Alexis Tsipras insisted late Monday that a "No" vote victory in a referendum would strengthen Athens' negotiations with creditors.
Tspiras defied warnings by European leaders that Greece faced an eventual exit from the euro unless voters backed the proposed bailout deal.
"I expect them to respect this democratic process, not to kill democracy in its birthplace," Tsipras said on state television in a live interview.
Standard & Poor's rating agency has cut Greece's credit grade by one notch further into junk status amid the country's deteriorating financial situation.
The agency says it now sees a 50-per cent chance of Greece leaving the eurozone.
In a statement, S&P says it interprets the Greek government's decision to hold a referendum on the rescue creditors' proposals for a bailout deal as indication that it "will prioritize domestic politics over financial and economic stability, commercial debt payments and eurozone membership."
Waving Greek flags and chanting "take the bailout and go!" thousands of pro-government protesters gathered outside parliament late Monday to back Prime Minister Alexis Tsipras' call to oppose a proposed compromise with creditors in a referendum.
Police said 13,000 people attended the rally in Athens' main Syntagma — the largest referendum rally so far— in a generally good natured protest joined by casually-dressed cabinet ministers.
"The government tried too hard to get this agreement. But the creditors kept asking for more.
I don't know what else we are supposed to do," said pensioner Satroula Noutsou, who joined a rowdy group of protesters, singing slogans as one demonstrator banged a drum.
"Tsipras is one of us, a regular person. And there are some people who don't like that."
European Union President Donald Tusk has warned the Greek people that a "no" vote in the referendum won't give their government more leverage to seek a better deal with Greece's creditors.
Tusk said a news conference in Brussels that "every government has a right to hold a referendum, therefore we respect the Greek decision."
"However, one thing should be very clear: if someone says that the government will have a stronger negotiating position with the 'no' vote, it is simply not true."
He added: "I'm afraid that which such a result of referendum, there will be even less space for negotiation."
U.K. Treasury Chief George Osborne says a Greek exit from the euro would be "traumatic" and Britain should "hope for the best but prepare for the worst."
Britain is not a member of the single currency, but Osborne says the Greek crisis was "one of the biggest external economic risks to the British economy and the situation today shows that these risks remain."
He told lawmakers: "I don't think anyone should underestimate the impact a Greek exit from the euro would have on the European economy and the knock on effects on us."
He said he had met Monday with Prime Minister David Cameron, Foreign Secretary Philip Hammond and Bank of England Governor Mark Carney to co-ordinate Britain's response to the crisis.
Osborne said several thousand Britons who live in Greece but receive British pensions would continue to get their payments. And customers of Britain's Alpha Bank, whose parent bank is Greek, will have their deposits covered by Britain's financial compensation scheme.
He said British tourists who go to Greece should take more euros than usual.
The White House says Greece's debt crisis poses no major, direct threat to the U.S. economy.
White House spokesman Josh Earnest says that's because the U.S. exposure to Greece's economy is small.
The White House is calling for Greece to remain in the eurozone. Earnest says the parties negotiating over Greece's debt must develop a package of reforms and financing that will leave Greece with a sustainable debt plan without leaving the eurozone.
Earnest is calling attention to "strong statements" from Greek leaders and other eurozone countries for Greece staying in the currency union. He says keeping Greece in the eurozone is in the interests of all parties involved.
President Barack Obama spoke about the developments in Greece in a phone call Monday with French President Francois Hollande.
Irish Prime Minister Enda Kenny has criticized Greece's surprise decision to hold a referendum on the existing bailout offer as unfair to other EU democracies.
Kenny says Ireland came close to suffering a Greek-style crisis, but accepted six years of austerity as the price for escaping its own 2010-2013 bailout. He says his government in 2011 was concerned it might have "to restrict capital outflows from banks and indeed to have the army surrounding ATM machines."
He says Greece's approach was making economic matters worse for Greek citizens. He is urging Greece to "come back to the table."
Kenny says Greek Prime Minister Alexis Tsipras is making an unreasonable demand on other EU members to extend the existing Tuesday deadline for repayment of international loans. He says this would require votes in many parliaments, and Tsipras was wrong to unveil referendum plans only a few days before the deadline.
Cyprus' president has sent a letter to Greek Prime Minister Alexis Tsipras saying he supports his request for an extension of a few days to the country's bailout.
The bailout expires Tuesday, and Tsipras asked for it to be extended so Greece can hold a referendum on creditor reform demands on Sunday.
The letter by Nicos Anastasiades, which was released by Greek officials, says Cyprus "not only supports but actually considers an extension necessary" for the bailout.
Anastasiades points out that Cyprus has already supported to extensions to the bailout, one in December and one in February.
Tsipras earlier requested an extension from eurozone country leaders, after finance ministers rejected a similar request on Saturday.
The Greek association of pharmacies has issued a statement assuring Greeks there are no drug shortages, in an effort to stem concerns on the first day of capital controls.
The Hellenic Association of Pharmaceutical Companies says there was the same adequacy of medication supplies as before a bank run began over the weekend. The government put limits on cash withdrawals to stem the run.
Meanwhile, government officials say they had contacted Greece's oil companies following complaints that gas stations were refusing to accept credit cards. One official says the companies have assured that all credit and debit card transactions are being accepted.
Government officials also contacted the supermarkets' association, which has said there will be no problems in supplies or commercial transactions.
The officials spoke only on condition of anonymity, in line with government rules.
Greek conservative opposition leader Antonis Samaras is challenging Prime Minister Alexis Tsipras to a TV debate on the referendum.
The conservative leader told his lawmakers that he was seeking a live debate with all the parliamentary party leaders ahead of Sunday's vote.
Samaras, who lost elections to Tsipras in January, echoed warnings made by a European leaders that a "No" vote would lead to the country's exit from the euro.
He said "it would be an unprecedented catastrophe ... If you want to stay in the euro, keep banks open, back Europe, vote Yes, otherwise cast a No ballot."
German Chancellor Angela Merkel says she sees "no compelling reason" to hold a special European Union summit on Greece at present.
Merkel said Monday that "we have to be very cautious about what messages we are sending." She says nearly all governments have a similar position on creditors' offer to Greece and there's been no change in that.
She says that "if things change" then a summit could make sense "any time," and she believes there will be a meeting after next weekend's referendum
Greece's Culture Ministry has announced that individuals and tour groups visiting the Acropolis will be able to pay for their tickets by credit card from now on.
It says that while there are cash difficulties in Greece, tour groups can pay by voucher if the group has one. Otherwise, the group agents can give a credit note to the ticket office including their tax ID number, and would be able to settle the cost after the banks re-open.
The ministry says this is a yearslong request that is now being met.
Greece has shut its banks for a week and imposed limits on cash withdrawals and transfers amid concerns the country could fall out of the euro.
Greece's hotels association has issued a statement warning that Greece's move to limit money withdrawals is already having an impact on the vital tourism industry.
The Hellenic Chamber of Hotels said: "These recent developments in our country already have immediate, real negative consequences on tourism. All must understand this."
"We wish and hope that all political forces will assume their responsibilities, restoring the country as quickly as possible to normality and stability, which are absolutely essential requirements to protect Greek tourism and to support one more time the national recovery effort of the Greek economy."
The hotel association says it is working with other tourist industry bodies to "safeguard the country's international image and to deal with any instances of exploitation of the current situation."
A Greek official says Prime Minister Alexis Tsipras has spoken by phone with European Commission head Jean-Claude Juncker and with European Parliament President Martin Schulz.
The official says Tsipras told Juncker that preventing the Greek people's democratic expression by shutting down the banks is not within Europe's democratic tradition. He asked for Juncker to help ensure the Greek bailout can be extended by a few days and liquidity restored to the banks.
The official says Tsipras told Juncker that "as a European politician, he must defend the traditions of Europe, so that the Greek people can decide unhindered on Sunday." He did not say what Juncker's response was.
Tsipras also asked Schulz to support the Greek proposal for a bailout extension of a few days.
The official spoke only on condition of anonymity, in line with government rules.
The European Union's top executive has called on the Greek people to vote against their government's wishes in Sunday's referendum and back the country's continued stay in the euro currency union.
European Commission President Jean-Claude Juncker says "It is time for Greeks to speak up and to shape their own destiny."
Months of bailout negotiations went off track over the weekend, when Greek Prime Minister Alexis Tsipras called a surprise referendum on the creditors' proposal for reforms in exchange for loans. Tsipras advised Greeks to vote 'No' to the proposals.
Juncker countered by saying "I'd like to ask the Greek people to vote 'yes.'"
"I very much like the Greeks, and I'd say to them 'You should not commit suicide because you are afraid of death. You should say 'yes.'"
Fears are that if the Greeks vote no and go with their government, the nation might fall out of the eurozone and face financial chaos.
European Commission President Jean-Claude Juncker says he feels betrayed by Greek Prime Minister's Alexis Tsipras suprise call for referendum last weekend and says that "playing one democracy against 18 others is not an attitude worthy of the great Greek nation."
After months of good relations with Tsipras as the bailout negotiations dragged on, Juncker turned against the Greek leader on Monday, complaining that "egotism, tactical games, populist games" took over from cool-headed economic analysis.
He said: "I feel a little betrayed."
The Greeks will vote on reforms that the country's creditors had proposed in exchange for loans.
Juncker said that ahead of the referendum "it would be advisable to the Greek government to tell the truth to the Greek people instead of simplifying its own message to a 'no-message.'"
The Greek government is making public transport in Athens free while the banks are closed.
Transport Minister Christos Spirtzis says fares in greater Athens for the capital's metro, tram, bus and trolley-bus services will be scrapped effective Monday.
Fares normally cost 1.20 euros ($1.34) for a 70 minute ride on a city transport service. Spirtzis says the decision would cost the government about 4 million euros per week.
Spirtzis says the decision was only effective in greater Athens, where about 40 per cent of the country's population lives.
Services in Thessaloniki, Greece's second largest city, are partially privatized, not allowing the government to waive fares.
Spain's economy minister is brushing off suggestions that the possibility of a Greek exit from the eurozone could economically damage his country.
Luis de Guindos said economic contagion is much less likely to happen now than it was in 2011 and in 2012, when many feared a Greek economic implosion could destabilize Spain financially.
Spain has the eurozone's fourth largest economy, but de Guindos said there are no longer fears of contagion that would slam his country and possibly cause the breakup of the zone.
De Guindos told reporters Monday that "we're much better prepared than we were two, three years ago."
He cited moves that propped up Spanish banks saddled with toxic property and loans, a lower Spanish deficit and relatively strong economic growth.
The head of Germany's main business lobby group says Greece cannot be kept in the euro "at any price" and that the immediate impact on German industry of a possible Greek exit would be limited.
Ulrich Grillo, the head of the Federation of German Industries, says that leaving the euro would be "a huge problem for the Greek economy, which is strongly dependent on imports." But he says the direct impact on German industry would be limited in view of the relatively small trade volume between the countries.
He added: "it is hard to calculate the indirect consequences, on the countries of the eurozone, the financial markets and economic expectations in Europe."
French President Francois Hollande says France has "nothing to fear" from an eventual Greek departure from the eurozone.
Hollande, speaking after an emergency meeting of top economic officials Monday, told reporters that he regrets Greece's decision to cut off negotiations "because we were very close to an agreement."
He says he wants negotiations to resume, and that France is in favour of Greece staying in the euro.
But if Greek voters choose to leave, Hollande says France "has nothing to fear from what could happen" because the French economy is "more robust" than it was when the Greek debt crisis first panicked markets five years ago.
He says France is pushing for Greece to stay in the euro not out of fear but out of solidarity and a belief that it would be better for Europe as a whole.
The European Union's executive Commission, which enforces the bloc's laws, says that Greece's decision to impose capital controls was "prima facie, justified."
Jonathan Hill, the Commission's top official responsible for financial stability, says "the stability of the financial and banking system in Greece constitutes a matter of overriding public interest and public policy that would appear to justify the imposition of temporary restrictions on capital flows."
He adds: "Maintaining financial stability is the main and immediate challenge for the country."
But Hill says that the free movement of capital should be restored as quickly as possible and that the Commission will monitor the way any restrictions are imposed.
Also on HuffPost