George Osborne: Eurozone crisis threatens all Europe
UK Chancellor George Osborne has said the eurozone debt crisis is a "real danger" to all of Europe as a summit in Brussels continued.
All of Europe's finance ministers met on Saturday to try to find a solution to the bloc's ongoing economic problems.
They concluded that banks should raise more than 100bn euros ($140bn; £87bn) in new capital.
But the eurozone is divided over a lasting solution.
The finance ministers from all 27 European Union states are meeting over the weekend for the talks. Heads of government will then gather on Sunday, and have announced plans for an extra meeting on Wednesday.
"We've had enough of short-term measures, sticking plaster that just gets us through the next few weeks," Mr Osborne said.
"The crisis of the eurozone is a real danger to all of Europe's economies, including Britain."
BBC business editor Robert Peston said that new forecasts from the bailout lenders - the so-called "troika" - showed that the current plan to revive the Greek economy had failed.
"The unavoidable implication is that the IMF will not provide any more bailout finance for Greece unless there are much bigger write-offs of Greek government debt by private sectors lenders," he said.
A recommendation that European Union banks should raise more than 100bn euros in new capital - to offset larger losses that the eurozone will force Greek debtholders to absorb - will be put to tomorrow's summit of EU government heads for ratification.
But Charles Dallara, the head of international banking lobby Institute of International Finance said of negotiations between the private sector and the eurozone: "We're nowhere near a deal."
The eurozone has already approved the next tranche of Greek bailout loans, potentially saving the country from a disastrous default.
On Friday, the 17 nations that use the euro approved the next tranche of bailout loans to Greece - an 8bn-euro loan that must still be signed off by the International Monetary Fund and that Athens should get in mid-November, officials said.
Debt-addled Greece has been bailed out - twice - along with the Irish Republic and Portugal. The eurozone is working on a third package for Greece now, as well as a solution that could help the huge-but-faltering economies of Spain and Italy.
But there have been widespread reports of deep divisions between France and Germany.
Greece 'not problem'
The German government has promised its taxpayers that its contribution will not go above 211bn euros so is looking for a way to increase the size of the fund without increasing the liabilities of German taxpayers.
In particular, France and Germany need to agree on how to increase the firepower of the eurozone's bailout fund, the European Financial Stability Facility (EFSF), from its current 440bn euros.
France has proposed turning the EFSF into a bank so that it could borrow from the European Central Bank (ECB), but Germany has refused to sanction such a move, arguing it would compromise the ECB's impartiality.
But that idea "is no longer an option," according to the Dutch Finance Minister, Jan Kees De Jager.
It is not clear how the eurozone would expand the fund now - which observers say needs to be closer in size to 2tn euros.
De Jager said two options remain for "leveraging" the rescue fund, but neither would involve the ECB. He did not say what those options are.
Previous disagreements between France and Germany about the bailout plans have centred on how much the private sector would have to contribute to any package.
Germany has been leading the push for the private sector to take steeper losses, but France and the ECB fear that this would destabilise the banking sector and worsen market turmoil.
French and German banks hold much of external Greek debt, as do Greek banks - meaning they would need to be recapitalised.
"Greece is not a central problem for the eurozone," insisted Evangelos Venizelos, finance minister of Greece - which has been racked by strikes and numerous difficult parliamentary votes on austerity measures.
"The point now is to adopt a general more constructive decision for the eurozone as a whole."
Negotiations have not yet begun properly with private sector lenders to Greece on a further reduction of what the Greek government will repay them.
Banks have already agreed to take a 21% loss, or "haircut", on their loans to Greece but there is growing pressure for them to accept higher losses. One diplomat told AFP that the eurozone wants banks to at accept an "at least 50%" loss on their Greek debt.
"Yesterday we agreed that we need a substantial increase in the contribution from the banks," said Jean-Claude Juncker, Luxembourg's prime minister who also chairs the meetings of eurozone finance ministers, on Saturday.
And Sweden's Anders Borg said that banks should not expect "freebies" from taxpayers.
The European Banking Authority has estimated that between 80bn and 100bn euros is needed to boost the capital reserves of banks.
A deal on the euro had been expected to be signed on Sunday, but France and Germany said they would not be able to reach an agreement by then and announced that leaders would meet again on Wednesday.
Sunday's summit had already been delayed from 17-18 October because more time was needed to finalise a plan.