In relation to whistleblower Edward Snowden's claim that Germany was in "in bed" with the United States, Merkel told Die Zeit newspaper that "it has for decades been the responsibility of secret services in our country to co-operate [with others] in adherence with particular and narrowly defined laws and that this provides for our security."
The chancellor said it remained to be seen to what extent reports about US spy programmes such as Prism, were true, and that she herself had only been made aware of it through media reports.
When it comes to the expansion of technological possibilities, "the balance between the largest possible scope for freedom and what the state needs to protect its citizens to the greatest degree possible must constantly be re-established," Merkel said in the interview, which will be published in full on Thursday.
She stressed that the discussion about what is proportionate should take place continuously. However, she did go on to say that "without the possibility to intercept telecommunications" the best possible guard against terror attacks could not be achieved.
Merkel also called for the special relationship between Germany and the United States not to be overlooked and called for "the necessary discussions to take place in a spirit that does not neglect that the United States "has for decades been and still is our most loyal ally."
On comparisons between the NSA and the East German Stasi police, Merkel said:
"As far as I'm concerned, there's no comparison between the secret service of the GDR (former East Germany) and the work of the secret service in democratic states. They are two completely different things and such comparisons lead only to the trivialization of what the secret service did to the people in the GDR.
"The work of the secret service in democratic states has always been necessary for the safety of citizens and will continue to be in the future. A country without a secret service would be too vulnerable."
When asked whether she herself read intelligence agency reports, Merkel said it had long been the case that either a government minister or the office of the German chancellery was responsible for the federal intelligence services.
The chancellor also pointed to the fact that Europe had taken a back seat in technological innovation.
"The data of each one of us who is active on the internet is constantly being tracked. The technology behind it is often not European and we are often only users. In Europe we don't have any search engine on the scale of Google. Europe invented little of what today defines our lives and what we take for granted," she told Die Zeit.