"connectivity libraries needed are not found" error in IBM Data Studio UPDATE

I am getting the following error when I try to create a new database in IBM Data Studio v3.1.1.0.

The connectivity libraries that are needed for local or remote non-JDBC operations were not found. To provide these libraries, you can install IBM data server client or a local DB2 server instance.


I have already started the instance using

db2start


command.

After searching exhaustively, I am not able to find any help on the internet regarding this error.
You may need to point IBM Data Studio to the database drivers. They are usually installed with DB2 under /myDB2_InstallationDirectory/SQLLIB/java.

The drivers themselves tend to be


db2jcc.jar
db2jcc_license_cu.jar


There are other drivers in that folder as well, but these two tend to be the main ones for Java (which IBM Data Studio is based on).