Digital currency and its impact on cross-border payments is a topic of growing importance in the global financial landscape. This subject has appeared in recent IELTS Writing Task 2 questions and is likely to continue being relevant in future exams. Let’s explore a sample question related to this theme and analyze how to craft strong responses for different band scores.
Some people believe that digital currencies will revolutionize cross-border payments and make international transactions faster and cheaper. Others argue that traditional banking systems are more reliable and secure. Discuss both views and give your own opinion.
Analyzing the Question
This question requires candidates to:
- Discuss the advantages of digital currencies for cross-border payments
- Explain the benefits of traditional banking systems
- Provide a personal opinion on the topic
Let’s examine three sample essays of varying quality to understand how to approach this question effectively.
Sample Essay 1 (Band 8-9)
In recent years, the rise of digital currencies has sparked a debate about their potential to transform international financial transactions. While proponents argue that these new forms of money will revolutionize cross-border payments, others maintain that conventional banking systems offer greater reliability and security. This essay will examine both perspectives before presenting my own viewpoint.
Advocates of digital currencies highlight several advantages for international transactions. Firstly, these technologies can significantly reduce the time and cost associated with cross-border payments. Traditional bank transfers often involve multiple intermediaries and can take several days to complete, whereas digital currency transactions can be near-instantaneous and incur minimal fees. Moreover, digital currencies operate on decentralized networks, potentially reducing the risk of a single point of failure and offering greater resilience against system outages or cyberattacks.
On the other hand, proponents of traditional banking systems emphasize their established track record and regulatory oversight. Banks have developed robust security measures over decades, including encryption, fraud detection, and customer verification processes. Additionally, most countries have deposit insurance schemes that protect customers’ funds up to certain limits, providing a safety net that is often absent in the digital currency sphere. Furthermore, traditional banks are subject to strict regulatory requirements, which can offer greater peace of mind to consumers and businesses alike.
In my opinion, while digital currencies show promising potential for revolutionizing cross-border payments, they are not yet mature enough to fully replace traditional banking systems. I believe that the ideal solution lies in a hybrid approach, where traditional banks integrate digital currency technologies to enhance their services. This could combine the speed and efficiency of digital currencies with the security and regulatory compliance of established banking institutions.
In conclusion, both digital currencies and traditional banking systems have their merits in facilitating cross-border payments. As technology continues to evolve, it is likely that we will see increasing convergence between these two approaches, ultimately benefiting consumers and businesses engaged in international transactions.
importance of digital banking for businesses
Essay Analysis (Band 8-9)
This essay demonstrates excellent writing skills and a comprehensive understanding of the topic, warranting a high band score of 8-9. Here’s why:
Task Response: The essay fully addresses all parts of the task, discussing both viewpoints and providing a clear personal opinion.
Coherence and Cohesion: The essay is well-organized with clear paragraphing and effective use of cohesive devices.
Lexical Resource: The writer uses a wide range of vocabulary accurately and appropriately, including topic-specific terms.
Grammatical Range and Accuracy: The essay showcases a variety of complex sentence structures with minimal errors.
Development of Ideas: Each point is well-developed with relevant examples and explanations.
Sample Essay 2 (Band 6-7)
Digital currencies and traditional banking systems both have their advantages and disadvantages when it comes to cross-border payments. In this essay, I will discuss both views and give my opinion.
Many people think digital currencies can make international transactions faster and cheaper. This is because digital currencies don’t need banks or other middlemen to transfer money. For example, sending Bitcoin from one country to another can be done in minutes and with low fees. Also, digital currencies work 24/7, so you don’t have to wait for banks to open.
However, other people believe traditional banking systems are more reliable and secure. Banks have been around for a long time and have strong security measures. They also follow strict rules set by governments. This means that if something goes wrong, there’s a better chance of getting your money back. For instance, many countries have insurance for bank deposits, which protects customers’ money.
In my opinion, both digital currencies and traditional banks have their place in cross-border payments. Digital currencies are good for fast and cheap transfers, especially for small amounts. But traditional banks are still important for large transactions and when security is a top priority.
To conclude, I think that in the future, we might see a mix of digital currencies and traditional banking methods for international payments. This could give people the best of both worlds – speed and low cost from digital currencies, and security from traditional banks.
Essay Analysis (Band 6-7)
This essay demonstrates good writing skills but lacks some of the sophistication seen in the Band 8-9 essay. Here’s why it would likely receive a Band 6-7 score:
Task Response: The essay addresses all parts of the task, but the ideas could be more fully developed.
Coherence and Cohesion: The essay has a clear structure, but the use of cohesive devices is less sophisticated than in the higher band essay.
Lexical Resource: The vocabulary is appropriate but less varied and precise compared to the Band 8-9 essay.
Grammatical Range and Accuracy: The essay uses a mix of simple and complex sentences with generally good control, but lacks the variety seen in higher band scores.
Development of Ideas: Ideas are relevant but could be expanded upon with more specific examples or deeper analysis.
Sample Essay 3 (Band 5-6)
Nowadays, digital currencies are becoming popular for international payments. Some people think they are better than traditional banks, but others disagree. I will talk about both sides and give my opinion.
Digital currencies like Bitcoin can make sending money to other countries very fast. You don’t need to wait for banks to process your payment. It’s also cheaper because there are no bank fees. This is good for people who want to send money to their families in other countries.
But traditional banks are still important. They are safer because governments control them. If you lose your money in a bank, you might get it back. With digital currencies, if you lose your password, you can lose all your money.
I think both digital currencies and banks are useful. Digital currencies are good for small, fast payments. Banks are better for big amounts of money and when you need more security.
In conclusion, digital currencies and banks both have good points. Maybe in the future, we will use both for international payments.
Essay Analysis (Band 5-6)
This essay demonstrates an adequate attempt at addressing the task but falls short in several areas, resulting in a Band 5-6 score:
Task Response: The essay covers the main points but lacks depth and detail in the discussion.
Coherence and Cohesion: The essay has a basic structure, but paragraphing and cohesive devices are limited.
Lexical Resource: The vocabulary is simple and repetitive, with limited use of topic-specific terms.
Grammatical Range and Accuracy: The essay mainly uses simple sentence structures with some errors that do not impede communication.
Development of Ideas: Ideas are present but underdeveloped, lacking specific examples or in-depth analysis.
importance of digital banking for businesses
Key Vocabulary
Digital currency (noun) /ˈdɪdʒɪtl ˈkʌrənsi/: Money that exists only in electronic form.
Cross-border payments (noun phrase) /krɒs ˈbɔːdə ˈpeɪmənts/: Financial transactions where the payer and the recipient are based in different countries.
Revolutionize (verb) /ˌrevəˈluːʃənaɪz/: To completely change the way people do something or think about something.
Decentralized (adjective) /diːˈsentrəlaɪzd/: Controlled by several local offices or authorities rather than one single one.
Intermediary (noun) /ˌɪntəˈmiːdiəri/: A person or organization that helps other people or organizations to make an agreement.
Regulatory oversight (noun phrase) /ˈreɡjələtəri ˈəʊvəsaɪt/: The act of carefully watching and checking a business or activity to ensure it follows rules and regulations.
Encryption (noun) /ɪnˈkrɪpʃn/: The process of encoding information in such a way that only authorized parties can access it.
Convergence (noun) /kənˈvɜːdʒəns/: The process of coming together or developing similarities.
Resilience (noun) /rɪˈzɪliəns/: The ability to recover quickly from difficulties.
Hybrid approach (noun phrase) /ˈhaɪbrɪd əˈprəʊtʃ/: A method that combines elements of different systems or strategies.
In conclusion, the topic of digital currencies and their impact on cross-border payments is likely to remain relevant in future IELTS Writing Task 2 questions. To prepare, practice writing essays on related themes such as:
- The role of cryptocurrencies in the global economy
- The advantages and disadvantages of cashless societies
- The impact of blockchain technology on financial services
- The future of international trade and digital payments
Remember to structure your essays clearly, use a range of vocabulary and grammatical structures, and support your arguments with relevant examples. Good luck with your IELTS preparation!
IELTS Writing practice on digital payments
To further improve your skills, try writing your own essay on this topic and share it in the comments section below. This practice will help you refine your writing and receive feedback from others preparing for the IELTS exam.