Whether the draconian plan will work is far from clear. Many commentators believe that without debt relief, Greece - whose 11 million people already owed 320 billion even before the latest rescue - could still leave the euro.
Despite the uncertainty, governance of the European Union's currency has plainly undergone a historic shift. In the space of one night, austere northern Europe took charge, forcing bitter medicine down the throat of a lax southern neighbour.
"I arrived in Greece a couple of weeks ago, assuming that some kind of compromise agreement would be arrived at, based on the very EU principle of consensus," said Michael Cox, director of LSE IDEAS, a research centre at the London School of Economics.
"Well, there has been little of that on display recently."
The moment that changed everything was when German Finance Minister Wolfgang Schaeuble discreetly inserted a proposal that if a deal failed to emerge, "Greece should be offered swift negotiations on a timeout from the euro area".
Within the context of the euro, it was nothing less than a bomb placed inside a box of chocolates - a present to the summit from an exasperated, conservative politician.
Schaeuble's "Grexit" would destroy two of the founding concepts of the single currency: Joining the euro is a one-way street and countries that are part of it are equal and sovereign.
With the tacit support of Finland, the Netherlands, Slovakia and other countries also exasperated by years of corruption, cronyism and foot-dragging, Europe's paymaster was showing the Greeks the door.
The fear was enough for Greek Prime Minister Alexis Tsipras to go home and sell to Parliament a package far worse than a deal his Government had previously dismissed as a "humiliation" and even "terrorism". His capitulation and the economy's plunge during his five months at the helm "are likely to turn undecided voters in other countries away" from extremist parties campaigning against Europe or austerity, said Vincenzo Scarpetta of OpenEurope.
But this short-term gain for the euro project will not cover up what is now an urgent priority: to overhaul how the currency is managed.
The bust-up showed a sovereign state could repeatedly abuse eurozone rules and be bailed out on the grounds of solidarity or fears its exit would unleash a domino effect.
Ultimately, losing all trust, the lenders swept away consensus and imposed their own solution, but at the cost of stoking resentment and accusations of bullying by an all-powerful Germany.
Fixing the dilemma lies with euro members surrendering more sovereignty, strengthening centralised control over fiscal policy, argues Jan Techau, director of the Carnegie Europe thinktank.
"Europeans should draw the consequences: prepare for a two-speed Europe," he said.
"They should create a constitutional arrangement for the EU that can accommodate one highly integrated core, the eurozone, and one less integrated group without the euro, ideally led by the UK. And they should expect that not all eurozone members will want to take that step, so some will leave the group even before the new set-up emerges."
Work should start now to prepare for the change, which could be hammered out in 2017 after elections in France and Germany and a likely referendum in Britain on whether to stay in the EU, suggested Techau.
But there is little appetite in Europe today for visionary projects of the kind that, a quarter of a century ago, gave birth to the border-free internal market and the single currency.
If anything, the mood is against mega-schemes and more in favour of national controls. And revising a European treaty is a political nightmare, worsened by the need to get the deal approved by national parliaments or referendums.
