There was no doubt that Europe had to do more in the realm of data protection, she said.
A French official was quoted by Reuters news agency as saying that the government in Paris planned to take up the German initiative.
Personal privacy is a sensitive issue in Germany where extensive surveillance was carried out under the Nazis and in communist East Germany.
A foreign policy spokesman for Mrs Merkel's Christian Democrats, Philipp Missfelder, recently said revelations about US spying had helped bring relations with Washington down to their worst level since the US-led invasion of Iraq in 2003.
Germany has been trying to persuade Washington to agree to a "no-spy" agreement but without success.