What the Currency Stability Index measures

The Currency Stability Index starts from a verifiable fact: the currency each jurisdiction actually uses. Dollarized and euroized places, and jurisdictions defending a credible hard peg, inherit the stability profile of their anchor. Floating currencies are scored on their own ten-year record. Three signals feed the score: exchange-rate volatility and trend depreciation against a reserve basket of the US dollar, the euro, and the Swiss franc, plus recent consumer-price inflation, with inflation carrying the largest weight because it erodes purchasing power even for people who never touch the currency market.

It deliberately measures value stability only. Convertibility, capital controls, and how easy it is to move money in and out are captured by the Economic Openness Index, and banking access by the Banking Index, so nothing is counted twice. Read all three together when judging where to hold cash, earn locally, or price a long stay. Note that a weak local currency can be an advantage for someone earning in dollars or euros, so how much this ranking matters depends on how exposed your income and savings are to the local economy.