Last week, a leaked BND report suggested it had monitored French and EU targets for the NSA.
Mrs Merkel defended the BND, in her first public comments on the scandal.
Its first priority was to ensure the safety of Germans, she said on Monday, and the government would do all it could to enable the agency to carry out its role.
"This ability to carry out its duties in the face of international terrorism threats is done in co-operation with other intelligence agencies, and that includes first and foremost the NSA."
While her office was prepared to respond to all questions, she said "striking the right balance is my job".
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