CITI: Greece's bailout negotiations are just getting started

On Monday, a meeting of Eurogroup finance ministers ended without an agreement on an extension to Greece's current bailout package.

And via Citi's Steve Englander, here is the clear explanation of where things stand in Europe right now:

The current positions are that the Eurogroup wants Greece to accept a program extension while they negotiate a longer term deal, while Greece wants to establish the principle that the current program has to be modified fundamentally - hence, no program extensions. So essentially they are arguing over whether the default is the current deal with a few modifications or a radically different deal.

Englander adds that going into Monday's meeting, the market was underplaying the risks that a quick end to negotiations between Greece and its creditors would be reached.

"We think it is still early days in these negotiations," Englander wrote on Monday. "Both sides see themselves a lot better off if the negotiations succeed on their terms, and importantly, think the other side will be better off giving in than going to the brink. So notwithstanding comments on both sides that this is not game theory, there is a striking resemblance."

On Monday, Reuters reported that analysts at JPMorgan estimate Greek banks have about 14 weeks of collateral on hand given the current pace of outflows from these institutions and the remaining funding available to Greek banks under its current bailout terms.

Following the conclusion of Monday's meeting, a number of headlines crossed Bloomberg as Greek finance minister Yanis Varoufakis spoke to reporters following the meeting.

Among his comments, Varoufakis said that he has "no doubt" there will ultimately be an agreement.

According to Bloomberg,, Varoufakis added that Monday's talks ended without an agreement because the drafted accord presented by Eurogroup president Jeroen Dijsselbloem, "failed to adequately define the scope for 'flexibility' within the current program."

As to what "flexibility" means? Varoufakis said he did not get a precise answer.