There are signs of a relative return of confidence in the euro area due to decisions taken by the European leaders as well as the central bank, the European Central Bank President Mario Draghi said Friday. Speaking at the 22nd Frankfurt European Banking Congress, Draghi said the decision by the European leaders to form a "financial union" by creating a single bank supervisor around the ECB and the proposal that European banks would receive direct capital support from the European Stability Mechanism, helped to calm markets. Further, the ECB had announced another round of bond purchases called Outright Monetary Transactions or OMTs. "Together with the announcement on the OMT, this led to the much more benign market conditions that have prevailed in the recent months," he said. "Therefore, I can address you today against the background of a relative return of confidence in the prospects for the euro area." The ECB stands ready to implement OMTs as and when required, he reiterated. The central bank has said that it will intervene in the market to buy government bonds if Spain places a request to the EU-IMF for a bailout. Such intervention will be aimed at lowering the borrowing costs for the country. Thus far, the Spanish government led by Prime Minister Mariano Rajoy has not made any bailout request for its economy, worried over the tough austerity measures and fiscal targets that come with an EU-IMF sponsored rescue. Turning to the proposed Single Supervisory Mechanism, Draghi said it is essential to have the legal basis laid out at least by January 1, 2013, so that preparations can begin. "I agree with those who say that we need to do it in a timely fashion but above all, we need to do it well," he said. Building the system around the ECB is "the only pragmatic one in the present circumstances", the central bank chief noted. Further, he pointed out that fourteen out of seventeen national central bank governors in the Eurosystem already have a supervisory role. Hence, the ECB, working jointly with the national supervisory authorities, will have the legal authority and technical capability to carry out this complex task successfully, he said. "Some observers have suggested that the presence in the same institution of monetary policy and supervisory decisions can lead to excessive burdens, a potential confusion of roles and/or distorted incentives," Draghi said. "These concerns must be taken seriously."