Germany has such a system in place, but not without limits. How important your Grade is depends on the subject you are studying, how popular it is and how well

Germany has such a system in place, but not without limits. How important your Grade is depends on the subject you are studying, how popular it is and how well grades correlate with success. For example, you can not be sure of a spot in a medicine school unless you have neat-perfect grades, whereas engineering or practical sciences are nearly a free-for-all, with 90% leaving after the first semester. I don't believe a purely merit-based system could work on a large scale with popular subjects such as medicine.