Tiny Cyprus, the third smallest economy in the euro zone, has asked for a 10 billion euro bailout. The entire economic output of the island is only 17.3 billion euros, but the financial sector is heavily exposed to Greek banks and there is a 1.7 billion shortfall that must be covered.
Meanwhile, the finance ministers of Italy, Spain, Germany, and France will meet tonight ahead of the EU summit meeting that begins tomorrow to try and come up with a short term solution to the eurozone's woes.
Finance chiefs of the euro zone's four biggest economies will hold last-minute talks in Paris on Tuesday evening to try to narrow differences on the currency area's future after Cyprus became the fifth country to request a bailout.
The finance ministers' session was called at such short notice - in an apparent rush to repair damage from a public rift between Merkel and leaders of the other three states when they met in Rome last Friday - that one finance minister's press staff only learned of the invitation on Tuesday morning.
Ministers from Germany, France, Italy and Spain will discuss how to manage the crisis in the short term and proposals for closer long-term fiscal and banking integration to prepare for a European Union summit starting on Thursday.
Financial markets are on edge and international pressure for decisive action is rising but the summit, the 20th since the bloc's debt problems began in early 2010, is not expected to produce a lasting solution to the crisis.
European Commission President Jose Manuel Barroso underlined just how much was at stake.
"It is not only economic integration, it is also the overall economic confidence in the euro area, and indeed, our commitment to the European project," he said in a speech in Brussels. "This is why we need to be bold and define the way forward."
A report prepared by the EU's top four officials suggests the euro zone could create a treasury for the single currency and jointly issue euro bonds in the medium term as the final stage of a fiscal union.
However, German Chancellor Merkel, who leads Europe's biggest economy and the main contributor to its bailout funds, again ruled out on Monday any sharing of debt or bank liabilities as "economically wrong and counter-productive".
Markets have already factored in the failure of the upcoming summit to resolve anything so it won't be a shock when the meeting adjourns with nothing much being proposed. But Cyprus is clearly a warning to the EU that Greece is far from being out of the woods and a Grexit is still possible - perhaps probable.