OTTAWA, Ontario (AP) — German Chancellor Angela Merkel said Thursday that Germany is committed to doing everything it can to maintain the euro and renewed her call for fiscal discipline by praising Canada for not "living on borrowed money" and saying it should serve as a model for Europe.

Merkel, fresh off her summer vacation, arrived in Ottawa for two days of meetings with Canadian Prime Minister Stephen Harper.

Last month, European Central Bank President Mario Draghi said the bank would do "whatever it takes" to preserve the euro — and markets surged on hopes of action. Spokesmen for Merkel and Italian Premier Mario Monti backed Draghi's comments last month and Merkel supported them on Thursday.

"What he said is something we repeated time and again since the beginning of the Greek difficulties more than two years ago. We feel committed to do everything we can to maintain the common currency. The European Central Bank, although it is of course independent, is completely in line with what we have said all along," Merkel said at a press conference with Harper.

Merkel said European leaders are making progress.

"We know in the common currency area there has to be more responsibility shared politically. I also underline that in many of these issues we feel we are on the right track, although time is pressing. We are very much aware of this," she said.

Merkel also lauded Canada for its economic management both in a statement and in person with Harper.

"Canada is an example of how one can emerge from the crisis in a robust way," Merkel said. "You have a free trade system, you have sound budgetary policy and you have quite strong rules in the banking system. If you look at the last global economic crisis, Canada has weathered this crisis quite well."

Merkel and Harper share the view that austerity, and not more government stimulus, is necessary. Harper, also a conservative, has said that fiscal discipline and economic growth can go hand in hand.

Canadian finance minister Jim Flaherty noted Wednesday that Canada has reduced its deficit in half since 2009 and is on track for a balanced budget within two years at a time of relatively modest growth. He said countries can strike a balance where you have modest growth yet maintain a fiscal track of balanced budgets.

Canada's oil and commodity-rich economy has fared better than other nations in the G-7 in recent years. There was no mortgage meltdown or subprime lending crisis in Canada, and its banks are rated among the soundest in the world. Canada did a stimulus in 2009 but is now attempting to balance the budget.

Merkel and Harper are also discussing Canada's bid for a free-trade pact with the European Union. For their part, the Europeans would consider the deal the broadest they've ever signed, Merkel said.

Harper called it "ambitious" and wants an agreement by the end of the year. He said this week there are some rounds of negotiations still to go. Merkel said she would help step up efforts to reach an agreement between Canada and the EU.

"There are a number of outstanding issues out there, but once I go back to Germany I will see to it that these negotiations come to a speedy conclusion," she said. "At a time when there is lack of growth in the world, we — Canada and Germany — are convinced that free trade is one of the best engines of growth that we can have."

Flaherty, Canada's finance minister, said despite Europe's struggles, Canada remains very interested because the EU is still the largest market in the world in terms of the size of its middle class.

Harper also reiterated Canada's refusal to contribute to a global bailout package for Europe through the International Monetary Fund. The United States has also declined. Both Harper and Merkel said a Canadian free trade deal with the EU isn't dependent on Canada cutting a check to support a bailout of the euro zone.