US Dollar Likely to Remain Dominant Reserve Currency Despite Risks

Oaktree co-chair Howard Marks believes that the US dollar will remain the world's main reserve currency for now, as there is no clear alternative capable of taking its place.

The euro remains the second-largest reserve currency but has failed to close the gap with the dollar, according to Marks. China's renminbi accounts for only about 2% of allocated official reserves and faces significant obstacles in becoming a major reserve currency due to capital controls and geopolitical tensions.

Marks pointed out that the dollar was involved in 89% of foreign exchange transactions in 2025 and accounted for 57% of allocated official reserves in the first quarter of 2026. He stated, 'The world needs safe, liquid reserve currencies for storing reserves and engaging in international transactions.'

The bigger concern for the dollar is the US government's fiscal position, with a deficit of around 6% of GDP despite low unemployment, and net interest outlays projected to exceed $1 trillion this year. Marks warned that continued fiscal expansion could eventually make investors question the purchasing power of the dollar and demand higher yields on US debt.