World is ‘probably stuck with the dollar for now’: Oaktree’s Howard Marks

As per the latest business developments, The US dollar is likely to stay the world’s main reserve currency for now, as there is no clear alternative capable of taking its place, according to Oaktree co-chair Howard Marks.

In his latest memo, Shall We Repeal the Laws of Economics – Part III, Marks stated the euro stays the second-largest reserve currency but has failed to close the gap with the dollar. China’s renminbi, in the meantime, accounts for only around 2% of allocated official reserves, while capital controls and geopolitical tensions make a rapid climb in its international role unlikely.

“The world needs safe, liquid reserve currencies for storing reserves and engaging in international transactions,” Marks wrote. For the dollar to lose its position, he stated, “another currency or group of currencies would have to take a larger role.”

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, according to data cited by Marks. “Overall, the world is probably stuck with the dollar for now,” he stated in the note.

Marks additionally pointed to gold’s growing role in central-bank reserves.

Citing a recent note from MUFG Bank, he stated gold had recently surpassed the dollar as the world’s leading central-bank reserve asset. But gold is not widely used for transactions and is unlikely to become so, he further noted. Cryptocurrencies, in the meantime, keep have a negligible role as reserve assets.

US fiscal position poses the bigger risk

The bigger concern for the dollar, Marks stated, is the US government’s fiscal position. The US deficit is around 6% of GROSS DOMESTIC PRODUCT despite unemployment of around 4%, while net interest outlays are projected to exceed $1 trillion this year, according to figures cited in the memo. Marks noted that the dollar’s status as the world’s reserve currency has allowed the US to continue financing its deficits in its own currency.

He described this as a “golden credit card”, but warned that continued fiscal expansion could eventually make market participants question the purchasing power of the dollar and demand elevated yields on US debt.

Marks further noted that he does not expect the US to stop making nominal payments on its debt, since the debt is denominated in dollars issued by the US government. The risk, he stated, is that those dollars could lose purchasing power.

“Creating large amounts of a currency can, all else equal, reduce its value relative to ‘things’ and other currencies,” Marks stated, referring to the possibility of a “debasement trade” in which market participants position for a slide in the purchasing power of the currency.

He noted that similar concerns had emerged after the The US central bank expanded its balance sheet during the 2008 global financial crisis. Those measures did not lead to a sustained debasement of the dollar or high inflation, he stated, but argued that the current situation is different because the large fiscal deficits are being run during a period of economic prosperity.

Selling US assets may not remove dollar risk

For market participants concerned around the dollar, Marks stated selling US stocks alone would not necessarily address the risk. Moving into US bank deposits, money-market funds or bonds would still leave market participants exposed to the dollar.

Diversification into assets denominated in other currencies, gold, non-US real estate or non-US firms could reduce dollar exposure, he stated, while additionally carrying their own risks. Marks stated the offering was ultimately one of US fiscal management rather than the US equity market or American firms.

“I don’t think the US can perpetually spend more than it takes in and not expect its creditworthiness to be questioned and its IOUs – its currency and Treasury securities – to be disrespected,” he stated.