Germany has begun the process of ratifying new rules requiring banks to build higher capital defenses against financial shocks - and hopes other European countries will quickly follow suit.

According to The Associated Press, Chancellor Angela Merkel's Cabinet approved draft legislation Wednesday, Aug 22 to implement the so-called Basel III rules requiring lenders to gradually increase their highest-quality capital from 2 to 7 percent of the risky assets they hold.

EU finance ministers agreed to adopt the rules in May but negotiations with the European Parliament to finalize details are continuing. German officials want to finish that process soon so the rules can take effect Jan 1, 2013.

Finance Minister Wolfgang Schaeuble said the German move is "a signal of how important we consider the issue" and added: "I hope our partners in Brussels feel this urgency."