Germany wants prime investors' role in future bailouts

BERLIN Nov 23 (Reuters) - Germany wants private investors to face "haircuts" or other debt payment restructure measures under a new euro zone crisis mechanism it wants to take effect from mid-2013, a government paper obtained by Reuters shows.

The aim of the new mechanism would be to avert the involvency of a euro zone member country, according to the government paper, which Germany wants to serve as a basis for discussions on a crisis mechanism at the European Commission.

"The private sector has precedence in contributing to the procedure," read the government paper, dated Nov. 11.

In order to include the private sector -- banks and financial investors -- in the crisis mechanism, newly issued euro zone bonds would include collective action clauses (CACs), the paper said.

The CACs would allow for a country to restructure its debt repayments should it be unable to meet them, either by extending the maturity of bonds, by reducing interest payments or by a so-called "haircut" -- or writedown.

Euro zone governments would also contribute funds to aid a state in financial trouble, and the International Monetary Fund could be involved in contrubuting to the mechanism as well.

Limited European Union treaty changes would be required for the new mechanism, according to the paper.

The mechanism would succeed the European Financial Stability Facility (EFSF) -- a safety net created after Greece's debt crisis rocked the euro zone earlier this year. The EFSF is due to run until 2013. (Reporting by Gernot Heller, writing by Paul Carrel)