The Australian Prudential Regulation Authority is yet to decide on its approach to total loss-absorbing capital but other regulators around the world are moving ahead with their own approaches. Regulators in Europe are among the more advanced. While they are all operating under the EU's Bank Recovery and Resolution Directive, each country is taking a slightly different approach.The TLAC standard had been designed so that failing systemically important banks would have efficient loss-absorbing and recapitalisation capacity available for authorities to implement an orderly resolution.One of the first to move was Denmark. Under the Financial Business Act, Danish mortgage lenders are required to hold a "debt buffer" of two per cent of outstanding mortgage loans.In order to help meet this requirement, mortgage lender Nykredit Realkredit A/S issued €500 million of three-year resolution bonds last week. Like tier two and additional tier one capital, the resolution bonds can be written-off at the point of non-viability.That said, the bonds rank senior to these instrument but junior to the bank's senior debt.Fitch Ratings rates Nykredit's senior debt at A and has assigned a preliminary rating of A to the resolution bonds. The rationale is that the viability rating assigned to the bank is "a" and the resolution bonds will only be written-off at the point of non-viability.Fitch went on to say that, if Nykredit reaches the two per cent debt buffer, it would consider raising the rating on the bank's senior debt by one notch.If APRA ultimately decides that our banks need to increase their total loss absorbing capacity, then resolution bonds are an option. Presumably, Standard & Poor's would rate these bonds in line with the banks' stand-alone credit profile of "a", in the case of the major banks.And while the introduction of resolution bonds would flag a reduction in the need for government support for the major banks, raising TLAC in this form could allow senior debt to continue to be ratted AA-.