"Europe has faced a big test in recent months. We have to strengthen the euro. It is not just about our money. The euro is much more than a currency," Merkel said in her New Year's address.
"Fortunately, we Europeans are unified. A unified Europe is the guarantor for our peace and freedom. The euro forms the basis of our prosperity," she said.
"Germany needs Europe and our common currency, for our own well-being and also in order to overcome big challenges worldwide."
Germany is the biggest contributor to bailouts given to Greece and Ireland - there are fears others might also need help - putting Merkel under fire and denting the popularity of the euro among voters.
A poll published this week by the mass-circulation daily Bild, which was highly critical of the rescues of Greece and Ireland, found 49 percent of those polled wanted the Deutsche mark back.
"We Germans live up to our responsibilities, even if sometimes this is hard," Merkel said.
The chancellor's address will be broadcast at 8:10pm on New Year's Eve on state channel ARD, and will be available to view online at 6pm.