Lucas Papademos, a former vice-president at the European Central Bank, said that using the July 21 deal as a template would be the most prudent way to tackle the debt crisis.

Imposing deeper haircuts on bondholders could render the scheme non-voluntary, posing risks to the broader eurozone, Papademos wrote in an article in Sunday's To Vima newspaper.

Private investors in Greek government bonds have already offered to accept a net present value loss of 21 percent under a deal struck with eurozone leaders in July.

But the country's international lenders now estimate that private creditors would have to forgive 60 percent of what Greece owes them to make its debt sustainable by 2020 and contain the July eurozone loan package at 109 billion euros.

"Right now the most effective and prudent path is to apply the agreement European leaders reached in July and strengthen it appropriately," Papademos wrote.

"Any changes to the PSI (private sector involvement) must not put at risk its voluntary character and must not lead to a credit event," he said.

Papademos warned that the consequences of a hard-pressed, non-voluntary debt restructuring and a sovereign default would not be limited to the cost of recapitalising the local banking system and supporting pension funds.

He said the effect on confidence, the banking system's liquidity and the real economy would be significant, undermining the process of fiscal stabilisation, especially if the debt restructuring sparked a credit crisis.

"If there is a non-voluntary debt restructuring and default of a eurozone country, the risk that the problems spread to banks may be broad and significant. The recent abrupt increases in the bond yields of eurozone member states send clear, warning signals," Papademos wrote.

Meetings were being held over the weekend to tackle Greece's debt and its impact on the European banking system. On Saturday, finance ministers tried to figure out how to bolster the capital of European banks to cope with any Greek default, and prevent contagion to other heavily indebted countries.