A primary purpose of financial intermediation is to:

Financial intermediation plays a crucial role in the economy by connecting those who have surplus funds, such as savers, with those who need funds, such as borrowers. This process enhances the efficiency of resource allocation, allowing for funds to be directed to the most productive uses. Financial intermediaries, such as banks and investment firms, assess the creditworthiness of borrowers, which helps in channeling funds to individuals or businesses that are likely to generate returns. This allocation of resources is essential for fostering economic growth and stability.

The ability of intermediaries to pool funds from numerous savers and lend them out in larger amounts also reduces transaction costs and risks associated with lending, making the process smoother for both parties. By effectively matching savers and borrowers, financial intermediaries support investment and consumption, driving overall economic activity.

The other options do not encapsulate the primary function of financial intermediation in the same way. Increasing the savings rate significantly is a potential benefit but not the main goal. Transforming long-term investments into immediate cash refers more to liquidity management rather than the primary purpose of intermediation. Eliminating the need for credit is contrary to the concept of financial intermediation, which inherently relies on the existence of credit to function effectively.