Downside risks to euro area economic outlook are mainly related to the tensions in several euro area financial markets, European Central Bank President Mario Draghi said Tuesday. During a hearing at the Committee on Economic and Monetary Affairs of the European Parliament, he said the bank expects weak economic activity in the near term and only a very gradual recovery thereafter. He said the central bank welcomes the European Commission's proposal for a Single Supervisory Mechanism (SSM) as well as the possibility of the involvement of non-EU members in the SSM. According to Draghi, the establishment of SSM is a key step in facilitating full implementation of fiscal consolidation and structural reforms as well as financial sector reforms, along with the completion of a genuine economic and monetary union. He noted that the participation of additional Member States of EU would provide an even stronger boost to the completion of the single market. He said that the adjustment process can be painful in the short term, but they are necessary corrections which will bring countries back on the path of sustainable growth. The policymaker said that the central bank's bond purchase program, the Outright Monetary Transactions (OMTs), announced in September have helped to support financial market confidence. Conditionality is key to the program and it preserves the incentives for governments to continue with economic and fiscal adjustments, he added. Meanwhile, the official noted that the euro area is making "good progress" towards achieving stable and sound foundations.