In his publication for German newspaper Die Welt, Schaeuble wrote that Germany should avoid the atmosphere of alienation and mistrust toward well-integrated Muslims residing in the country and promote the idea of peaceful coexistence among various cultures and religions.
According to him, many Germans adhere to wrong generalizations labelling "Islam" and "Muslims" as negative terms. The growing number of Muslims in the country, Islamist terrorism, sexual assaults by migrants as well as the increasing number of refugees pose serious challenges to Germany and cause xenophobic and racist moods, he argued.
"We were willing and are willing now to promote the development of a German Islam, the development of the self-perception of Muslims that live here as German Muslims," the German FM wrote.
He also noted that Germans should more actively integrate newcomers if they want to preserve their traditional way of life.
The number of Muslims in the country has increased dramatically over the last year, after Merkel started to pursue an open-door policy toward refugees from the Middle East. In 2015 alone, German authorities welcomed over one million of migrants, a development that raised security concerns among the local population.