The topic of risk management in financial institutions frequently appears in IELTS Writing Task 2 exams, particularly in questions about business, economy and banking sectors. Based on analysis of past IELTS exams, this theme has appeared in various forms over the past 5 years and continues to be relevant as global financial markets evolve. Let’s examine a recent IELTS question on this topic.
Task Analysis
Some people believe that banks should be strictly regulated by governments to reduce financial risks. Others argue that banks should have more freedom to operate independently. Discuss both views and give your opinion.
This question requires candidates to:
- Discuss arguments for government regulation of banks
- Present views supporting banking independence
- Provide a balanced analysis
- State and justify their own position
Band 9 Sample Essay
Financial regulation has become a crucial topic in modern banking, especially after importance of understanding financial risks before investing. While some advocate for strict government oversight, others support greater banking autonomy. This essay will examine both perspectives before presenting my view.
Those supporting stringent regulation argue that government control is essential for financial stability. The 2008 financial crisis demonstrated how unrestrained banking practices can lead to economic collapse, affecting millions of people worldwide. Strict oversight ensures banks maintain adequate capital reserves and follow responsible lending practices, protecting both customers and the broader economy.
Conversely, proponents of banking freedom contend that excessive regulation stifles innovation and economic growth. They maintain that banks need flexibility to develop new financial products and services, similar to how future trends in financial technology are reshaping the industry. Over-regulation, they argue, can reduce competitiveness and limit economic development.
In my opinion, a balanced approach combining reasonable regulation with operational freedom is optimal. While basic regulatory frameworks are necessary to prevent risky behavior and protect consumers, banks should retain sufficient autonomy to innovate and compete effectively. This balance can promote both stability and growth in the financial sector.
Band 7 Sample Essay
The debate over banking regulation has become increasingly important in today’s economy. This essay will discuss different viewpoints on this issue and provide my perspective.
Supporters of strict regulation believe that government control is necessary to protect the public. Banks handle people’s money and savings, so they must be carefully monitored. Additionally, when banks take too many risks, it can cause serious problems for the whole economy, as seen in past financial crises.
On the other hand, those favoring banking freedom argue that too much regulation can be harmful. Banks need flexibility to compete and develop new services, especially as impact of the sharing economy on finance continues to grow. They say that excessive rules make banking services more expensive and less efficient.
In my view, both regulation and freedom are important. While banks need some rules to ensure they operate safely, too many restrictions could prevent them from serving customers effectively. The key is finding the right balance between control and flexibility.
Key Vocabulary
- stringent (adj) /ˈstrɪndʒənt/ – strict, severe
- oversight (n) /ˈəʊvəsaɪt/ – supervision, monitoring
- stifle (v) /ˈstaɪfəl/ – suppress, restrain
- autonomy (n) /ɔːˈtɒnəmi/ – independence, self-governance
- regulatory framework (n) /ˌreɡjʊˈleɪtəri ˈfreɪmwɜːk/ – system of regulations
- operational freedom (n) /ˌɒpəˈreɪʃənl ˈfriːdəm/ – independence in operations
- competitiveness (n) /kəmˈpetɪtɪvnəs/ – ability to compete successfully
Banking regulation and financial stability illustration
Predicted Future Topics
Similar questions might focus on:
- Digital banking regulation
- International banking standards
- Financial consumer protection
- Banking sector reforms
Practice writing your own essay on this topic and share it in the comments for feedback. Remember to maintain a clear structure and use relevant examples to support your arguments.
