The topic of digital currencies and their impact on global finance has been gaining prominence in recent IELTS Writing Task 2 exams. Based on trend analysis, it’s likely to appear more frequently in future tests due to its relevance in today’s rapidly evolving financial landscape. Let’s explore this topic through sample essays and in-depth analysis to help you prepare for your IELTS Writing Task 2.
Analyzing the Task 2 Question
Some people believe that digital currencies like Bitcoin will have a significant impact on the global financial system. Others think their effect will be limited. Discuss both views and give your opinion.
This question requires you to:
- Discuss the view that digital currencies will significantly impact global finance
- Discuss the opposing view that their effect will be limited
- Provide your own opinion on the matter
Remember to address all parts of the question and support your arguments with relevant examples and explanations.
Digital Currency Global Finance
Sample Essay 1 (Band 8-9)
Digital currencies, particularly cryptocurrencies like Bitcoin, have sparked intense debate regarding their potential to revolutionize the global financial system. While some argue that these digital assets will profoundly reshape international finance, others contend that their influence will remain limited. This essay will examine both perspectives before presenting my own viewpoint.
Proponents of digital currencies argue that they have the potential to dramatically alter the financial landscape. Firstly, cryptocurrencies offer a decentralized alternative to traditional banking systems, potentially reducing transaction costs and increasing financial inclusion for the unbanked population. Moreover, blockchain technology, which underpins most digital currencies, could enhance transparency and security in financial transactions, mitigating risks such as fraud and money laundering. Additionally, as more countries and institutions adopt or recognize digital currencies, they could challenge the dominance of traditional reserve currencies like the US dollar, potentially reshaping global economic power dynamics.
On the other hand, skeptics maintain that the impact of digital currencies will be constrained by several factors. They argue that the high volatility of cryptocurrencies makes them unsuitable as a stable store of value or medium of exchange, limiting their practical use in everyday transactions. Furthermore, regulatory challenges and the potential for illicit activities associated with some digital currencies may hinder their widespread adoption by governments and financial institutions. Critics also point out that central banks are developing their own digital currencies, which could potentially outcompete private cryptocurrencies while maintaining the existing financial order.
In my opinion, while digital currencies may not completely overhaul the global financial system in the short term, their long-term impact is likely to be significant. The underlying blockchain technology has already begun to influence various sectors beyond finance, including supply chain management and voting systems. As regulatory frameworks evolve and the technology matures, digital currencies could play an increasingly important role in international trade, remittances, and financial services. However, this transition is likely to be gradual, with digital currencies coexisting with and complementing traditional financial systems rather than entirely replacing them.
In conclusion, the debate over Digital Currencies’ Effect On Global Finance reflects the complex and evolving nature of technological innovation in the financial sector. While their immediate impact may be limited by various challenges, the potential for long-term transformation should not be underestimated. As the world becomes increasingly digitized, it is crucial for policymakers, financial institutions, and individuals to stay informed and adaptable to these emerging financial technologies.
(Word count: 398)
Essay Analysis (Band 8-9)
This essay demonstrates excellence in several key areas:
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Task Response: The essay fully addresses all parts of the question, discussing both viewpoints and providing a clear personal opinion.
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Coherence and Cohesion: The essay is well-organized with clear paragraphing and effective use of linking words (“Firstly”, “Moreover”, “On the other hand”, “In conclusion”).
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Lexical Resource: The writer uses a wide range of vocabulary accurately and appropriately (“decentralized alternative”, “mitigating risks”, “reshaping global economic power dynamics”).
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Grammatical Range and Accuracy: The essay showcases a variety of complex sentence structures with very few errors (“As regulatory frameworks evolve and the technology matures, digital currencies could play an increasingly important role…”).
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Argumentation: Each point is well-developed with clear explanations and examples, demonstrating a sophisticated understanding of the topic.
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Conclusion: The conclusion effectively summarizes the main points and provides a balanced final perspective on the issue.
Sample Essay 2 (Band 6-7)
In recent years, digital currencies like Bitcoin have become more popular. Some people think they will change the way money works around the world, while others believe their effect won’t be very big. This essay will look at both sides and give my opinion.
Those who support digital currencies say they can make big changes to global finance. First, these currencies can help people who don’t have bank accounts to use money more easily. They can send money to other countries without paying high fees. Also, the technology behind digital currencies, called blockchain, can make financial transactions safer and more transparent. This could help reduce problems like fraud.
However, there are also reasons why digital currencies might not have a big impact. One problem is that the value of cryptocurrencies can change a lot in a short time, which makes them risky to use for everyday purchases. Another issue is that governments are worried about people using digital currencies for illegal activities. This means they might make strict rules that limit how these currencies can be used.
In my opinion, digital currencies will probably have some effect on global finance, but it might not be as big as some people think. I believe that traditional banks and money systems will still be important, but they might start using some of the technology from digital currencies to improve their services. For example, some banks are already looking at using blockchain to make their systems faster and more secure.
To conclude, while digital currencies have the potential to change some aspects of global finance, it’s likely that their impact will be gradual and limited in some ways. Both traditional and new forms of money will probably exist together in the future.
(Word count: 309)
Essay Analysis (Band 6-7)
This essay demonstrates good writing skills but has some areas for improvement:
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Task Response: The essay addresses all parts of the question, but the arguments could be more developed and nuanced.
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Coherence and Cohesion: The essay has a clear structure, but the use of cohesive devices is somewhat limited (“First”, “Also”, “However”).
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Lexical Resource: The vocabulary is generally appropriate but lacks the sophistication of higher band scores (“big changes”, “more easily”, “safer”).
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Grammatical Range and Accuracy: The essay uses a mix of simple and complex sentences with generally good accuracy, but there’s room for more variety.
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Argumentation: While the main points are presented, they could be elaborated on more fully with specific examples or data.
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Conclusion: The conclusion summarizes the main points but could offer a more insightful final thought.
Key Vocabulary to Remember
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Cryptocurrency (noun) /ˌkrɪptəʊˈkʌrənsi/ – a digital currency in which encryption techniques are used to regulate the generation of units of currency and verify the transfer of funds.
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Blockchain (noun) /ˈblɒktʃeɪn/ – a system in which a record of transactions made in bitcoin or another cryptocurrency are maintained across several computers that are linked in a peer-to-peer network.
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Decentralized (adjective) /diːˈsentrəlaɪzd/ – controlled by several local offices or authorities rather than one single one.
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Volatility (noun) /ˌvɒləˈtɪləti/ – liability to change rapidly and unpredictably, especially for the worse.
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Financial inclusion (noun phrase) /faɪˈnænʃəl ɪnˈkluːʒən/ – the availability and equality of opportunities to access financial services.
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Remittance (noun) /rɪˈmɪtns/ – a sum of money sent in payment or as a gift.
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Regulatory framework (noun phrase) /ˈregjələtəri ˈfreɪmwɜːk/ – a system of regulations and the means to enforce them, usually established by a government to regulate a specific activity.
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Fiat currency (noun phrase) /ˈfiːæt ˈkʌrənsi/ – government-issued currency that is not backed by a physical commodity, such as gold or silver, but rather by the government that issued it.
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Peer-to-peer (adjective) /pɪər tə pɪər/ – of or relating to computer networks in which each computer can act as a server for the others, allowing shared access to files and peripherals without the need for a central server.
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Disruptive technology (noun phrase) /dɪsˈrʌptɪv tekˈnɒlədʒi/ – an innovation that significantly alters the way that consumers, industries, or businesses operate.
Conclusion
The topic of digital currencies and their impact on global finance is a complex and evolving one, likely to appear in future IELTS Writing Task 2 exams. To prepare effectively, practice writing essays on related topics such as:
- The advantages and disadvantages of cashless societies
- The role of technology in modernizing financial services
- The challenges of regulating new financial technologies
Remember to structure your essays clearly, use a range of vocabulary and complex sentence structures, and support your arguments with relevant examples. Feel free to practice by writing your own essay on this topic and sharing it in the comments section for feedback and discussion.
