Thilo Sarrazin of the Bundesbank came under fire for telling the weekly newspaper Welt a.m. Sonntag that "all Jews share the same gene." He also said Muslim immigrants across Europe were not willing or capable of integrating into western societies.

Last year, Sarrazin, who previously served as finance minister for Berlin, told a magazine that "I do not need to accept anyone who lives on handouts from a state that it rejects, is not adequately concerned about the education of their children and constantly produces new, little headscarf-clad girls."

He later apologized for those remarks.

However, Sarrazin, 65, would know full well that his country has had little tolerance for anti-Semitic remarks since the Holocaust, and that many of Germany's immigrants have complained about racist remarks and xenophobic behavior.

On Sunday, several German lawmakers demanded that Sarrazin step down from his post as board member at the Bundesbank and resign his party membership of the left-leaning Social Democrats — demands that Sarrazin rejected.

Merkel told German public Television ARD that "the choice of words, the discrimination of entire groups, the ostracism and the contempt is unacceptable and does not lead to a solution."

Asked whether she wanted Sarrazin to step down, Merkel said while the Bundesbank was independent in making such decisions, she was convinced it would discuss his replacement.

"I'm very certain that they will also talk about this at the Bundesbank. We know that they talk not only about financial problems, but that the Bundesbank is also representing our entire country, domestically and internationally as well," Merkel said.