After a disappointingly un-uber-dovish speech this morning by Draghi,it appears the ECB needed to full ease-tard to make sure ‘markets’ believe. EURUSD tumbld 50 pips – to the lows of the day – after Reuters reports that, in what is becoming increasingly clear desperation, The ECB is mulling buying the debt of cities and regions.

As Reuters reports,

The European Central Bank is examining whether to buy municipal bonds of cities such as Paris or regions like Bavaria, according to people with knowledge of a possible extension of its one-trillion-euro-plus money printing scheme.

This regional bond buying could be one in a series of measures to be rolled out in the coming months, although one of the sources said time was short for a full launch in December and that this would likely come by March next year.

The ECB declined to comment.

As part of preparations for the next rate-setting meeting of policy-setters on Dec. 3, ECB officials are now analysing whether and how to extend its shopping list to municipal bonds, issued by, say, Madrid or Mainz, or a federal German state.

“You have big markets, such as Spain and Italy. France has a well developed market,” said one person.

According to data from Thomson Reuters IFR, almost $500 billion of bonds issued by European cities and regions are in circulation. The regions have sold more than $76 billion of bonds over the last year.

The source said that while some cities were risky, they had the fallback of central governments. Municipal bonds typically have a lower credit rating than governments. It is a fragmented market in Europe, with many small issues.

But you should not worry that The ECB is wastuing European taxpayer capital…

“Some cities in Spain or Italy are bust. But a city will always be there,” said the person. “Someone will always pay back the debt. They have the backing of the government and the ability to raise taxes.”