Following months of acrimonious and ultimately fruitless negotiations, the Greek public has spoken on whether to accept or reject the terms of a further bailout agreement with its European Union-International Monetary Fund lenders.

A No vote is expected to send shock waves throughout Europe, presenting the euro zone, and potentially the EU, with the greatest challenge since its foundation.

In many ways the conscious decision of Greece’s lenders to defer any negotiations until after the referendum may have backfired – by remaining relatively quiet over the past few days, the lenders allowed a communications vacuum, and the Greek government was able to command the narrative ahead of the referendum.

The contradictory situation that left Greek voters unclear about the true ramifications of a No vote is as much the fault of lenders as the Greek government, with no EU leader willing to clarify the true position ahead of the referendum.

The focus will now switch to the reaction of the European creditors. Even before the voting booths closed, there was confirmation German chancellor Angela Merkel is flying to Paris for emergency talks with French president François Hollande this evening. A summit of euro zone leaders has also been convened for 6pm on Tuesday.

Crisis

But the immediate focus will be on Frankfurt. The ECB’s next move will determine the next stage in the crisis.

The ECB governing council had scheduled a conference call today to assess its provision of emergency liquidity funding to the Greek banks. The outcome is of enormous significance. Without an increase in emergency liquidity, Greek banks will simply be unable to open tomorrow, despite claims by Greek finance minister Yanis Varoufakis on Friday that they would open without complications eight days after they shut.

The Greek finance minister was reported to have convened a meeting with the heads of the main banks and the governor of the Bank of Greece last night as the votes were still being counted. Greece's banks had been suffering from declining collateral and deposits even before last week's bank closure and the introduction of capital controls. The need for bank recapitalisation is now also on the horizon.

ECB president Mario Draghi, who has consistently said that the ECB will continue to keep Greek banks afloat if they are solvent, will face an uphill battle to convince his governing council – and particularly the openly sceptical German representation on the board – that the ECB can continue to prop up Greek banks.

The fact that Greece is now no longer in a bailout programme could legally justify the ECB pulling the plug on emergency liquidity assistance.

The ECB chief has consistently tried to wait for a political signal before acting. The latest twist in the crisis is unlikely to be any different.

Common approach

Despite differences between

Germany

and

France

in recent weeks about the handling of the Greek bailout discussions – France was virtually alone in pushing for some kind of last-minute deal to be offered to Greece – the euro zone’s largest members are likely to forge a common approach.

As Greece’s creditors react to the historic referendum in the next 24 hours, more trenchant long-term difficulties await. If creditors do agree to engage with the new Greek government, the focus will be on the negotiation of a third bailout for Athens.

In terms of logistics, the Greek government will be required to officially request a bailout from the European Stability Mechanism fund through eurogroup chairman Jeroen Dijssebloem. The eurogroup will then consider this request.

This is where trouble looms. Many of the demands of the defunct second bailout extension negotiations, such as changes to the pension system and VAT reform, are likely to be contained in the third bailout – it seems unlikely that the previous staunch resistance from Greece to such measures will magically disappear, even if lenders do agree to some further concessions in these areas.

What may come into play this time around, however, is the question of debt relief. While EU officials have said they were always willing to include a reference to debt relief as part of a third bailout, the Greek government will demand that the new bailout contains a specific commitment on debt relief.

Debt rescheduling

The call by the IMF on Thursday to consider debt relief for Greece will also bolster the Greek government’s case.

Privately, lenders have also suggested that they would not go beyond the promise of a November 2012 agreement which talks about debt rescheduling. Whether the third bailout goes further than those parameters will be a key focus of discussions.

But with these questions of debt relief and the consideration of a further loan package for Greece come serious political questions, namely whether the finance ministers of the 18 other euro zone member states can convince their publics that further loans for Greece should be considered.

Ultimately a decision on a third bailout package for Greece through the ESM fund needs unanimous agreements from all countries in the euro zone, including parliamentary approval in up to six member states, depending on the nature and scale of the loan package.

Even if a third bailout package was sanctioned, lenders are likely to demand further fiscal adjustment measures from Greece. Even IMF managing director Christine Lagarde – a strong proponent of debt relief for Greece – said last week that there should be no relief without reforms.

In addition, the disastrous breakdown of the Greek economy and banking sector over the past 10 days means that creditors are likely to request even more strenuous fiscal adjustments in exchange for loans.

Finally, the breakdown in trust between the Greek people and their creditor institutions is likely to be the biggest challenge in the coming days.

Whether senior EU figures and the Greek prime minister can put the chaos of the last few weeks behind them and reconvene around a negotiating table remains to be seen.

The future of the euro zone may depend on it.