A key failure of the Euro arrangement was the treatment by banks as if sovereign debt was risk free, regardless of the country borrowing the money. So the banks went crazy since the regulatory structure allowed the banks to loan without putting any risk premium or reserves on weakening countries like the PIGS. Banks shouldn’t be loaning money to governments without taking the economic risk of non-payment. The bank bailout stemmed from the recognition that managing the Euro banking business had failed by letting banks get in way to deep to weak sovereign states.
Finally, much of the current curtufle isn’t about repayment of the Greek debt, a possibility that is highly remote. The big problem now is that Greece cannot even reach a primary surplus status (govt income greater than expenditures not considering debt or interest payments). For this reason alone, the EEC had to show Greece the door since Greece’s plans to reach a primary surplus were wishful thinking and political flatulence.