Greece's creditor banks broke off talks after failing to agree with the government about how much money investors will lose by swapping their bonds, increasing the risk of the euro-area's first sovereign default.

Proposals put forward by a committee representing financial firms have “not produced a constructive consolidated response by all parties,” the Washington-based Institute of International Finance said in a statement today. “Discussions with Greece and the official sector are paused for reflection on the benefits of a voluntary approach.” The government said the two sides will reconvene discussions in five days.

Greek officials and the nation's creditors agreed in October to implement a 50 percent cut in the face value of Greek debt, with a goal of reducing Greece's borrowings to 120 percent of gross domestic product by 2020. More than two months after the accord was announced, the two sides still need to agree on the coupon and maturity of the new bonds to determine the total losses for investors.