Digital currencies and international payments have become increasingly prevalent topics in IELTS Writing Task 2 examinations. Based on recent test reports and analysis of past papers, questions about digital payment systems and financial technology have appeared in approximately 15% of tests over the past two years, particularly in countries like India, China, and South Korea where digital transformation is rapidly advancing.
Similar to how e-commerce is changing global trade dynamics, the impact of digital currencies on international payments presents complex arguments that test-takers must analyze carefully.
Digital currencies revolutionizing international payment systems with blockchain technology
Task Analysis
Some people believe that digital currencies will completely replace traditional banking systems for international payments. To what extent do you agree or disagree with this statement?
This question requires candidates to:
- Express their position on digital currencies’ role in international payments
- Evaluate the potential for complete replacement of traditional banking
- Provide supporting arguments and examples
- Consider counterarguments
- Draw a reasoned conclusion
Sample Essay 1 (Band 8.5)
The rapid advancement of digital currencies has sparked intense debate about their potential to revolutionize international payment systems. While I partially agree that these technologies will significantly transform cross-border transactions, I believe they will complement rather than completely replace traditional banking infrastructure.
Digital currencies offer several compelling advantages that make them attractive for international payments. Firstly, blockchain-based transactions can be processed instantly, eliminating the lengthy clearing periods typically associated with traditional bank transfers. Additionally, these systems often have lower transaction fees since they bypass multiple intermediaries, making them particularly beneficial for sending small amounts across borders. The impact of blockchain on transaction processing has already demonstrated significant cost and time savings for businesses engaged in international trade.
However, traditional banking systems possess certain strengths that digital currencies cannot easily replicate. Banks provide essential services beyond mere payment processing, including credit assessment, financial advice, and regulatory compliance. Moreover, the established banking infrastructure offers stability and security that many people and businesses still trust. Central banks and financial institutions also play crucial roles in maintaining economic stability through monetary policy, which would be challenging to implement in a purely digital currency system.
Looking ahead, the most likely scenario is a hybrid system where digital currencies and traditional banking coexist and complement each other. This integration would combine the efficiency and innovation of digital currencies with the stability and regulatory framework of traditional banking. Financial institutions are already adapting by developing their own digital solutions while maintaining their core banking services.
In conclusion, while digital currencies will undoubtedly transform international payments, they are more likely to enhance rather than completely replace traditional banking systems. This evolution will create a more diverse and efficient financial ecosystem that benefits from both innovations in digital currency and the established strengths of traditional banking.
Integration of digital currencies with traditional banking systems showing hybrid approach
Sample Essay 2 (Band 6.5)
Nowadays, digital currencies are becoming more popular for international payments. While some people think they will replace traditional banks completely, I think this is only partly true.
Digital currencies have some good points for international payments. They are faster than normal bank transfers and usually cost less money to send. For example, when people send money to their families in other countries, they can save money on bank fees by using digital currencies. Also, these payments happen very quickly, sometimes in just a few minutes.
However, traditional banks are still important and have advantages. They are safer and more reliable because governments control them. Many people trust banks more than digital currencies because banks have been around for a long time. Also, banks offer many other services like loans and savings accounts that digital currencies don’t provide.
I think in the future, both systems will work together. Digital currencies will be used more for sending money internationally, but traditional banks will still be important for other services. This will give people more choices for how they want to manage their money.
In conclusion, while digital currencies are becoming more important for international payments, they won’t completely replace traditional banks. Instead, both systems will exist together and serve different purposes.
Analysis of Band Scores
Band 8.5 Essay Features:
- Sophisticated vocabulary and complex structures
- Clear position with nuanced arguments
- Coherent paragraphing with smooth transitions
- Relevant examples and specific details
- Balanced analysis of both perspectives
Band 6.5 Essay Features:
- Basic but clear vocabulary
- Simple but accurate sentence structures
- Clear position but less developed arguments
- Basic organization with some progression
- Limited use of examples and details
Key Vocabulary
- blockchain (n) /ˈblɒktʃeɪn/ – a digital system for recording transactions
- intermediaries (n) /ˌɪntəˈmiːdiəri/ – organizations acting as middlemen
- regulatory compliance (n) /ˌreɡjʊˈleɪtəri kəmˈplaɪəns/ – adherence to laws and regulations
- monetary policy (n) /ˈmʌnɪtəri ˈpɒləsi/ – control of money supply by central banks
- hybrid system (n) /ˈhaɪbrɪd ˈsɪstəm/ – combination of different systems
- cross-border transactions (n) /krɒs ˈbɔːdə trænˈzækʃnz/ – financial dealings between countries
- financial ecosystem (n) /faɪˈnænʃəl ˈiːkəʊˌsɪstəm/ – network of financial services and institutions
For practice, try writing your own essay about how digital currencies might affect small businesses in international trade. Share your response in the comments for feedback and discussion.
