Greek politicians began debating €28 billion (Dh146.1bn) of fresh austerity cuts that need to pass for the debt-laden country to secure its latest financial bailout.
The euro sank near to a record low against the Swiss franc as investors feared a lack of agreement on the controversial measures could trigger a debt default.
A default would spell grave consequences for European banks and other financially troubled euro-zone nations, say analysts.
"It's imperative that these measures are passed," said Tim Fox, the chief economist of Emirates NBD. "If that does not happen, Greece would not receive the final tranche of its first bailout, which could trigger a messy default."
The unpopular package of spending cuts and tax rises and an additional implementation law will be voted on in parliament tomorrow and Thursday.
The measures must be agreed for the EU and IMF to grant the next €12bn tranche of loans next month from the €110bn bailout programme. But approval of the cuts is far from assured. George Papandreou, the Greek prime minister, has faced an internal rebellion about the measures, and at least two deputies have said they are considering not voting in favour.
In a sign of how high the stakes are, Panos Beglitis, the defence minister, warned of "catastrophe" if parliament blocked the plans.
While the Greek parliament's three-day debate on the austerity measures began in Athens yesterday, EU officials discussed a possible solution to the crisis suggested by France.
The French idea involves a rollover of Greek debt into fresh 30-year bonds. French banks with exposure to Greece had agreed to the plan, Nicolas Sarkozy, the French president, said yesterday.
The Institute of International Finance, a global banking group, discussed the proposal with EU officials during a meeting in Rome.
"We won't let Greece fail. We will defend the euro. It's in all of our interests," Mr Sarkozy said.
Investors' anxieties about the outcome of the Greek crisis weighed on currency markets. The euro slipped to a two-week low against the US dollar and fell against the Swiss franc.
Greece's financial woes are one of the black spots clouding the global economic outlook. Another concern surrounds high inflation linked to higher prices for food, energy and other commodities.
Global interest rates must rise to avoid inflation becoming entrenched, the Bank for International Settlements warned.
"Tighter global monetary policy is needed in order to contain inflation pressures and ward off financial stability risks," it said in its annual report on Sunday.
Central Banks may have to act faster than in the past to raise interest rates, it said. So far the European Central Bank has been the only central bank of the major developed economies to increase rates since the global downturn in 2008.
In contrast, policymakers in Asia and other emerging markets are already pushing up borrowing costs to try to contain inflation.