The topic of automation’s impact on global financial markets is a highly relevant and increasingly common theme in IELTS Writing Task 2 essays. Based on recent trends and the growing influence of technology in the financial sector, it’s likely that this subject will continue to appear in future IELTS exams. Let’s explore a sample question and provide model essays for different band scores.

Some people believe that the increasing use of automation in financial markets is beneficial for the global economy, while others argue that it poses significant risks. Discuss both views and give your own opinion.

Analysis of the Question

This question requires candidates to:

1. Discuss the benefits of automation in financial markets
2. Explore the potential risks associated with automation
3. Provide a balanced argument considering both perspectives
4. Express a personal opinion on the matter

Now, let’s look at sample essays for different band scores.

Band 8-9 Sample Essay

The rapid advancement of technology has led to an increased use of automation in global financial markets, sparking a debate about its implications for the world economy. While some argue that this trend brings substantial benefits, others contend that it introduces significant risks. This essay will examine both perspectives before presenting my own viewpoint.

Proponents of automation in financial markets argue that it brings numerous advantages to the global economy. Firstly, automated systems can process vast amounts of data and execute trades at speeds far beyond human capabilities, leading to increased market efficiency and liquidity. This enhanced efficiency can result in more accurate pricing of assets and reduced transaction costs for investors. Additionally, automation can help in risk management by quickly identifying and responding to market anomalies, potentially preventing large-scale market crashes. Furthermore, the use of algorithms and machine learning in financial analysis can provide more sophisticated insights, enabling better-informed investment decisions.

On the other hand, critics argue that the increasing reliance on automation in financial markets poses considerable risks. One primary concern is the potential for systemic failures due to technical glitches or cyberattacks, which could have catastrophic consequences for the global economy. The 2010 “Flash Crash,” where U.S. stock markets plummeted due to algorithmic trading errors, serves as a cautionary tale. Moreover, the speed and complexity of automated systems can lead to unexpected market behaviors that human traders may struggle to understand or control. There are also concerns about job displacement in the financial sector as roles traditionally performed by humans are increasingly automated.

Automation in global financial markets: risks and benefits

In my opinion, while the risks associated with automation in financial markets are valid and require careful consideration, the potential benefits outweigh the drawbacks. The increased efficiency, improved risk management, and enhanced analytical capabilities offered by automation can contribute significantly to economic growth and stability. However, it is crucial to implement robust regulatory frameworks and safeguards to mitigate the risks. This could include stress testing of automated systems, cybersecurity measures, and maintaining human oversight in critical decision-making processes.

In conclusion, the automation of financial markets presents both opportunities and challenges for the global economy. By embracing the benefits while actively addressing the risks, we can harness the power of technology to create a more efficient and resilient financial system that serves the interests of the global economy.

(Word count: 416)

Band 6-7 Sample Essay

The use of automation in financial markets is a topic that has both supporters and critics. Some people think it’s good for the global economy, while others believe it’s risky. This essay will discuss both sides of the argument and give my opinion.

There are several benefits to using automation in financial markets. Firstly, computers can process information much faster than humans, which means trades can happen more quickly. This can make the market more efficient and help investors save money on transaction costs. Secondly, automated systems can analyze large amounts of data to make better investment decisions. This could lead to more profitable investments and a stronger economy. Lastly, automation can help detect unusual market behavior, which might prevent big market crashes.

However, there are also risks associated with automation in financial markets. One major concern is that if the computer systems fail or get hacked, it could cause serious problems for the whole economy. For example, in 2010, there was a “Flash Crash” in the U.S. stock market caused by a problem with automated trading. Another issue is that as more jobs in finance become automated, many people might lose their jobs. This could lead to unemployment and economic problems. Additionally, the complex algorithms used in automated trading can sometimes behave in unexpected ways, which could cause market instability.

Human vs machine in financial trading

In my opinion, while there are risks involved with automation in financial markets, the benefits are greater. The increased efficiency and better decision-making capabilities of automated systems can help the global economy grow. However, it’s important to have strict rules and safety measures in place to prevent problems. We should also find ways to retrain people who might lose their jobs due to automation.

To conclude, automation in financial markets has both advantages and disadvantages for the global economy. I believe that if we use it carefully and responsibly, it can be a positive force for economic growth and development.

(Word count: 345)

Band 5-6 Sample Essay

Nowadays, many financial markets use computers and automation. Some people think this is good for the world’s economy, but others say it is dangerous. I will talk about both ideas and give my opinion.

First, there are some good things about using automation in financial markets. Computers can work very fast and do many calculations quickly. This means that buying and selling stocks can happen faster, which can be good for investors. Also, computers can look at a lot of information to help make better choices about investments. This might help the economy grow stronger.

But there are also some bad things about automation in financial markets. If the computers break or someone hacks them, it could cause big problems for the whole economy. Another problem is that many people might lose their jobs if computers do all the work. This could make unemployment go up, which is bad for the economy.

Automation's impact on jobs in the financial sector

I think that using automation in financial markets is mostly good, but we need to be careful. It can help make the economy stronger and more efficient. But we should also have rules to make sure the computers don’t cause problems. We should also help people who might lose their jobs because of automation.

In conclusion, automation in financial markets has both good and bad points. I believe it can help the world’s economy if we use it in the right way.

(Word count: 261)

Explanation of Band Scores

Band 8-9 Essay

This essay demonstrates:

• A wide range of vocabulary used accurately and appropriately (e.g., “rapid advancement,” “substantial benefits,” “enhanced efficiency”)
• Complex sentence structures with a variety of linking words
• A clear, logical structure with each paragraph focusing on a specific point
• A balanced discussion of both views with relevant examples
• A clear personal opinion supported by reasoning
• Addresses all parts of the task fully

Band 6-7 Essay

This essay shows:

• A sufficient range of vocabulary with some less common items (e.g., “transaction costs,” “market instability”)
• A mix of simple and complex sentence structures
• A clear overall progression, though some paragraphs could be more fully developed
• Discusses both views and provides some examples
• Expresses a personal opinion
• Addresses all parts of the task, though some aspects could be more fully explored

Band 5-6 Essay

This essay demonstrates:

• A limited range of vocabulary, mostly using common words
• Mainly simple sentence structures with some attempts at more complex ones
• A basic structure with some logical progression
• Presents both views but with limited development and few specific examples
• Expresses a personal opinion but with limited support
• Addresses the main parts of the task but in a simple way

Key Vocabulary to Remember

1. Automation (noun) /ˌɔːtəˈmeɪʃn/ – the use of machines and computers to do work that was previously done by people
2. Efficiency (noun) /ɪˈfɪʃnsi/ – the quality of doing something well with no waste of time or money
3. Liquidity (noun) /lɪˈkwɪdəti/ – the ability to convert assets into cash quickly and easily
4. Algorithm (noun) /ˈælɡərɪðəm/ – a set of rules to be followed in calculations or problem-solving operations, especially by a computer
5. Systemic (adjective) /sɪˈstemɪk/ – relating to or affecting a whole system, rather than just some parts of it
6. Cybersecurity (noun) /ˌsaɪbəsɪˈkjʊərəti/ – the state of being protected against the criminal or unauthorized use of electronic data
7. Volatility (noun) /ˌvɒləˈtɪləti/ – the tendency to change quickly and unpredictably, especially for the worse
8. Regulatory framework (noun phrase) /ˈreɡjələtɔri ˈfreɪmwɜːk/ – a system of regulations and the means to enforce them
9. Resilient (adjective) /rɪˈzɪliənt/ – able to withstand or recover quickly from difficult conditions
10. Transaction costs (noun phrase) /trænˈzækʃn kɒsts/ – the costs associated with buying or selling a financial asset

In conclusion, the topic of automation’s impact on global financial markets is a complex and relevant issue for IELTS Writing Task 2. By understanding the different perspectives and using appropriate vocabulary and structures, candidates can effectively address this type of question. To further improve your skills, try writing your own essay on this topic and share it in the comments section for feedback and discussion. Additionally, you may want to practice with similar topics such as how automation is influencing the service industry or the impact of technology on the future of work.