"We need to continue to work on this. If I look at the discussions, we have an opportunity to show how we can keep this euro area together," she said delivering the opening speech at the World Economic Forum annual meeting here.
Merkel said that it is important to maintain the prosperity of Europe as a whole.
Noting that Germany is going to participate in reducing the imbalances in the European Union area, Merkel said Europe has an opportunity to prove that it can be a role model and play a major role in the global economy.
"Germany need others and we are lucky to be with others in tackling the problems. We will not become faint hearted. Deficiencies are there because of structural problems and we have to address these weaknesses.
"Now we have to do something constructive. The question is do we dare to do so... we have to show that sustainable growth of Europe becomes a benchmark for global economy," she said.
"We (in Europe) are no longer using excuses ... otherwise we will lose reputation, over the next two years we will have more integration, we will need to create more jobs," she added.
Merkel's speech comes against the backdrop of spiralling European debt turmoil, which is also hurting overall global economic growth.
Touching upon the WTO Doha round of trade talks, she said it is crucial and the next meeting of G-20 leaders would be important for the way forward.
"There would be numerous hindrances that need to be addressed... we need to take along all the countries together, including Japan, India and many others outside Europe," the German Chancellor said.
During a Q&A session after the opening speech, Merkel said that there is a strong European Union system in place.
"I hope almost all countries would become members of euro," she said in response to a question but was evasive when asked whether she meant the UK and Denmark.
The German Chancellor pointed out that it is not an easy task to tackle problems in Europe.
"Politics in different countries have a role to play, at times there are also problems like communications problems, the language barrier. It is not an easy task (to tackle the European problem), but we have to do it," she noted.
Merkel stressed that she wants to make Europe an attractive investment destination.
"I would invite the business community to Europe, I want to make Europe an attractive investment destination and I'm absolutely convinced that we would be able to tackle the problem," she added.