Greece's prime minister says the country will close its banks and introduce capital controls in a bid to avert a financial collapse. Earlier, the ECB decided to maintain emergency funding to Greece's banking system.
Greek Prime Minister Alexis Tsipras called for calm as he announced plans Sunday to shut the country's banks and place restrictions on cash withdrawals.
Tspiras did not specify how long the institutions would be closed for, but said citizens' savings, wages and pensions were "guaranteed."
The measures come after long lines formed at cash machines around the country following the Greek government's surprise decision to hold a July 5 referendum on the bailout terms put forward by its international creditors - the ECB, the International Monetary Fund (IMF) and the European Commission.
Greece has been locked in negotiations with its lenders for months in an attempt to secure an extension on its bailout loan in return for implementing fiscal reforms. The latest round of talks collapsed without a deal on Saturday.
"(Rejection) of the Greek government's request for a short extension of the program was an unprecedented act by European standards, questioning the right of a sovereign people to decide," Tsipras said in a televised address to the nation, reiterating his request for a short-term extension.
ECB freezes cash for banks
Earlier on Sunday, the European Central Bank said it would maintain, not increase, emergency funding to Greece's banks, which means they have no way to replenish diminishing deposits.
"It is now more than clear that this decision has no other aim than to blackmail the will of the Greek people and prevent the smooth democratic process of the referendum," Tsipras added.
He said the ECB's decision had forced Greece to introduce capital controls. Such measures are typically taken by a government, central bank or other regulatory body to cap the flow of foreign money in and out of the domestic economy, or to limit the amount of cash that can be withdrawn from ATMs.
Neighboring Cyprus, which also received an international bailout, introduced capital controls in 2013. They were lifted in April this year.
Greece is due to make a 1.5 billion euro ($1.7 billion) repayment to the IMF on Tuesday, which is also when its current bailout expires. Without further funding help, Greece risks defaulting on its debt and a possible exit from the 19-member eurozone.
German Chancellor Angela Merkel discussed the Greek crisis with US President Barack Obama on Sunday evening, with both leaders stressing that it was "critically important to make every effort to return to a path that will allow Greece to resume reforms and growth within the eurozone," a White House statement said.
Germany and France are expected to hold crisis meetings over the situation on Monday.