Given the risks of holding large numbers of banknotes, plus its inconvenience and the cost of insurance, rates might have to go significantly below zero to make a difference.
There are other problems. If banks struggle to cut deposit rates below zero, then they will either refuse to pass the rate cut on to borrowers, or risk declining profits – though Tenreyro argues the boost to the economy helps profits.
If the policy is designed to boost asset prices, it could raise the risk of bubbles in financial markets, when increasing wealth inequalities and making life tougher for those trying to get onto the housing ladder.
And there might be doubts over the policy’s effectiveness. If companies, scarred by the pandemic and already heavily indebted, cannot be persuaded to borrow to invest at interest rates of 0.1pc, will they really change their minds and borrow more at minus 0.1pc?
Meanwhile attempting to weaken the currency is an uncertain path.
Britain has not noticeably boomed following the falls in sterling after the financial crisis or the Brexit vote. And if every country tries negative rates as a means of achieving a more competitive currency, the result will be that they all stand still, because exchange rates are a zero sum game.
What does the international evidence say?
Countries including Japan, Switzerland, Denmark and Sweden have all gone negative. So has the eurozone.
That they were not all booming away before the pandemic indicates that the policy is far from a cure-all for sluggish GDP growth.
The European Central Bank’s reviews concluded that, on balance, negative rates have helped the economy by lowering financing costs.
Officials had to offer cheap funds direct to banks to stop the policy undermining their models, however, and warned that risk-taking behaviour could be distorted by sub-zero borrowing costs.
Policymaker Isabel Schnabel has warned that it should only ever be a short-term policy, as “side effects are likely to become more relevant over time”.
