During periods of high and volatile inflation, an FI's:

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High and volatile inflation typically leads to an increase in interest rates, which can expose FIs to interest rate risk if their assets and liabilities do not reprice at the same rate. Additionally, high inflation can lead to increased default risk, which would increase credit risk exposure for FIs. Therefore, in such periods, an FI's interest rate risk and credit risk exposure tend to increase.

During Periods of High and Volatile Inflation, an FI's