The topic of digital currencies and their impact on traditional banking has become increasingly relevant in recent years, making it a popular subject for IELTS Writing Task 2 essays. Based on an analysis of past IELTS exams and current trends, this topic is likely to appear more frequently in future tests. To help you prepare, let’s examine a sample question and provide expert essay responses for different band scores.
Some people believe that the rise of digital currencies will significantly disrupt traditional banking systems. To what extent do you agree or disagree with this statement?
Analyzing the Question
This question asks for your opinion on the potential Impact Of Digital Currencies On Traditional Banking systems. To answer effectively, you should:
- Clearly state your position (agree, disagree, or partially agree)
- Provide reasons and examples to support your stance
- Consider potential counterarguments
- Conclude by summarizing your main points
Now, let’s look at sample essays for different band scores.
Sample Essay for Band 8-9
Digital currencies, such as Bitcoin and Ethereum, have gained significant traction in recent years, leading many to speculate about their potential to revolutionize the financial landscape. I strongly agree that these cryptocurrencies will substantially disrupt traditional banking systems, albeit with some caveats.
Firstly, digital currencies offer several advantages over traditional banking that make them attractive to users. They provide faster and cheaper international transactions, eliminating the need for intermediaries and reducing fees. For instance, sending money across borders using cryptocurrencies can be completed within minutes, compared to days for traditional bank transfers. This efficiency could force banks to innovate and improve their services to remain competitive.
Secondly, the decentralized nature of many digital currencies challenges the monopoly that banks have long held over financial services. Blockchain technology, which underpins most cryptocurrencies, allows for transparent and secure transactions without the need for a central authority. This could potentially reduce the power and influence of traditional banks in the global economy.
However, it is important to note that the disruption caused by digital currencies may not lead to the complete obsolescence of traditional banking. Banks have the resources and regulatory support to adapt to this changing landscape. Many are already exploring blockchain technology and developing their own digital currencies, such as Central Bank Digital Currencies (CBDCs). This suggests that rather than being entirely displaced, traditional banks may evolve to incorporate aspects of digital currencies into their operations.
In conclusion, while digital currencies will undoubtedly cause significant disruption to traditional banking systems, the extent of this disruption may be tempered by the ability of banks to adapt and integrate new technologies. The future financial landscape is likely to be a hybrid system that combines elements of both traditional and digital banking.
(Word count: 292)
The impact of digital currencies on traditional banking systems is a complex issue that requires careful consideration of both the potential benefits and challenges. This essay effectively addresses these aspects, providing a balanced and well-supported argument.
Digital currencies disrupting traditional banking systems
Sample Essay for Band 6-7
In recent years, digital currencies have become more popular, and some people think they will change traditional banking a lot. I partially agree with this idea because while digital currencies have some advantages, traditional banks still have important roles to play.
One reason why digital currencies might disrupt banking is that they are faster and cheaper for sending money. For example, using Bitcoin, people can transfer money to other countries quickly without paying high fees. This could make people choose digital currencies instead of traditional bank services for international transfers.
Another point is that digital currencies don’t need a central bank to control them. This means people can use them without relying on traditional banks. Some people like this because they don’t trust banks or governments with their money.
However, traditional banks have some advantages that digital currencies don’t. Banks are regulated by governments, which makes them safer for most people. Also, banks offer services like loans and savings accounts that digital currencies can’t provide easily.
In conclusion, while digital currencies will probably change some aspects of banking, I don’t think they will completely replace traditional banks. Instead, banks might start using some of the technology behind digital currencies to improve their services.
(Word count: 213)
This essay demonstrates a basic understanding of the topic and attempts to present arguments for both sides. However, it lacks the depth and sophistication of the higher band score essay. The language used is simpler, and the ideas are less developed.
Sample Essay for Band 5-6
Digital currencies are becoming more popular nowadays. Some people think they will change traditional banking a lot. I agree with this idea because digital currencies have many benefits.
First, digital currencies are easy to use. People can send money quickly using their phones or computers. This is faster than going to a bank. For example, my friend uses Bitcoin to send money to his family in another country.
Second, digital currencies don’t need banks. This means people can control their own money without banks. Some people like this because they don’t trust banks.
However, traditional banks are still important. They keep money safe and give loans to people. Many people still trust banks more than digital currencies.
In conclusion, I think digital currencies will change banking, but traditional banks will still exist. Maybe banks will start using digital currencies too.
(Word count: 139)
This essay presents a simpler approach to the topic, with limited development of ideas and basic language use. It lacks the depth and coherence of higher band score essays, but still attempts to address the question.
Explanation of Band Scores
The differences in band scores for these essays can be attributed to several factors:
Content and Task Response: The Band 8-9 essay provides a comprehensive answer with well-developed ideas and relevant examples. The Band 6-7 essay covers the main points but lacks depth, while the Band 5-6 essay has limited content and simplistic ideas.
Coherence and Cohesion: The higher band essay has a clear structure with effective use of cohesive devices. The lower band essays have a basic structure but less sophisticated linking of ideas.
Lexical Resource: The Band 8-9 essay uses a wide range of vocabulary accurately. The Band 6-7 essay has adequate vocabulary, while the Band 5-6 essay relies on simpler words and phrases.
Grammatical Range and Accuracy: The highest band essay demonstrates complex sentence structures with few errors. The lower band essays use simpler structures and may contain more grammatical mistakes.
How digital currencies will reshape global financial systems is a topic that requires careful consideration of various factors, as demonstrated in these sample essays.
Key Vocabulary to Remember
- Cryptocurrency (noun) /ˌkrɪptəʊˈkʌrənsi/ – a digital currency that uses cryptography for security
- Blockchain (noun) /ˈblɒktʃeɪn/ – a system of recording information in a way that makes it difficult to change or hack
- Decentralized (adjective) /diːˈsentrəlaɪzd/ – controlled by several local offices or authorities rather than one single one
- Disrupt (verb) /dɪsˈrʌpt/ – to prevent something from continuing as usual or as expected
- Innovation (noun) /ˌɪnəˈveɪʃn/ – a new idea, device, or method
- Intermediary (noun) /ˌɪntəˈmiːdiəri/ – a person or organization that helps other people or organizations to make an agreement
- Obsolescence (noun) /ˌɒbsəˈlesns/ – the process of becoming outdated and no longer used
- Regulatory (adjective) /ˈreɡjələtəri/ – relating to regulation or the person or organization that officially controls an area of business or industry and makes sure it operates fairly
- Transparent (adjective) /trænsˈpærənt/ – open and honest, without secrets
- Volatile (adjective) /ˈvɒlətaɪl/ – likely to change suddenly and unexpectedly, especially by getting worse
Key vocabulary for digital currency essay
In conclusion, the impact of digital currencies on traditional banking is a complex and evolving topic that is 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 a cashless society
- The role of technology in modern financial systems
- The future of money in a digital age
The pros and cons of implementing a global digital currency could also be an interesting topic to explore in your practice essays.
We encourage you to practice writing your own essay on this topic and share it in the comments section below. This active practice will help you improve your writing skills and prepare for the IELTS exam effectively.
