"We will, above all, discuss which European providers we have who offer security for our citizens," Merkel said on Saturday in her weekly podcast. "So that you don't have to go across the Atlantic with emails and other things, but can build up communications networks also within Europe."
The two leaders are to meet on Wednesday in Paris, where Ms. Merkel will also speak on unspecified economic matters, her spokesman said.
German companies like Deutsche Telekom have already aired the possibility of creating such networks as a way to allay public fears about data sent over the Internet being scanned and collected by the National Security Agency when it passes through servers in the United States or those belonging to American companies.
But this was the first time that Merkel had publicly embraced the proposal. The chancellor, who was raised in Communist East Germany, where the government regularly spied on its citizens, publicly vented at being monitored when it was discovered last fall that her cellphone had most likely been tapped by the American intelligence agency.
The affair, brought to light when the former NSA contractor Edward J Snowden leaked agency documents, continues to rile particularly the political and media elite, which are stunned that the Americans who taught post-Nazi Germans the meaning of privacy and freedom of the individual are collecting private data on such a scale.
President Obama has promised Merkel that her phone is no longer monitored. But a German newspaper revealed recently that the phone of her predecessor, Gerhard Schröder, apparently was monitored in 2002, when he opposed the Bush administration's plans to go to war in Iraq.
For all the fury in Germany, the French reaction to the NSA efforts has been more equivocal, since it emerged that French intelligence was as assiduous in collecting communications and online data - a necessary tool in fighting terrorism acknowledged by many Western countries.
In Washington last week, Obama and Hollande suggested at a news conference that any French-American rancour on the subject had dissipated.
"Following the revelations that appeared due to Snowden," Hollande said, "we clarified things, President Obama and myself clarified things."
Now, Hollande said, "we are making headway" in cooperating in the fight on terrorism without compromising principles of protecting privacy. "Mutual trust has been restored," he said, based on respect for each country.
It is unlikely that Merkel, who has said she will visit Washington in coming months, would be so definite, because Germans are much more upset.
But in her podcast she also acknowledged the difficulties of preserving privacy and of forging a common European policy on data protection. Germany, which because of its Nazi and Communist pasts has strict data protection laws, wants unity, but "we don't want our data protection softened," Merkel said.
Noting that companies like Google and Facebook base their European data operations in countries she did not name "where data protection is weakest," Merkel added, "That is a situation which we also cannot countenance forever."
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