The U.S. economy is “in much better shape than anyplace else, at least in part because the Fed was really aggressive really early in this cycle and continued to be aggressive,” he said.

McCarthy also argued that negative interest rates are not appropriate for all economies. “I think it makes sense for small open economies that rely heavily on exports, and therefore their currency, for growth,” he said. “It made sense for Switzerland; it makes sense for Denmark.”

But for a large economy like the U.S. that relies much less on exports, the benefits of negative rates would be debatable, McCarthy said. At the same time, the policy would pose financial and political risks for the Fed.

What does this means for treasurers?

Treasurers may not need to worry about negative rates on their deposits in the United States, but they could well run into them in Europe.

Stephen Baseby, associate policy and technical director at the London-based Association of Corporate Treasurers (ACT), said that “either extremely low yields or negative yields are passing through to the corporate.”

The earnings rates on deposits under three months in sterling currently range from 0.2% to 0.4% a year, Baseby said. “Our colleagues in euros are beginning to find they're being offered negative rates.

“It creates some interesting anomalies,” he added, noting that some Swiss companies were holding cash in current accounts, which don't pay interest, to avoid being charged negative rates. “But most bank regulators have understood that one—they put limitations on money in current accounts.”

Baseby and others note that deposit rates in Europe are being driven lower not just by central banks' negative interest rate policies, but by Basel III's liquidity coverage ratio, which increased the amount of high-quality assets banks have to hold against customers' deposits. And at this point, many of those high-quality assets, such as European sovereign bonds, offer negative yields.

“If I put 1 million pounds with a bank as a corporate, it has to go out and buy 400 pounds of gilts with it straight away, or if it's euros, central bank bonds over there,” Baseby said. “If those bonds have a negative rate, it immediately lowers the effective rate [the banks] can pay [the corporate], even if they lend that money out commercially.”

Baseby downplayed negative rates as a concern for treasurers, though. “The problem of very low returns on cash has been with us for quite some time,” he said. “The move to negative rates is annoying, but it's not catastrophic. It doesn't change the overall argument for holding cash.”

Negative rates and borrowing.

If interest rates are heading below zero, it seems that companies might benefit by being able to access money more cheaply, and certainly rates in the corporate bond market have headed lower.

But an October report from Bank of America Merrill Lynch economists notes that in Denmark there was an increase in the cost of both housing loans and loans to nonfinancial companies, while in Switzerland the cost of mortgages rose. The BofA economists suggest the move in borrowing costs may reflect “banks' attempt to offset the deposit rate effect on their profitability.”

Anthony Carfang, a principal at Chicago consultancy Treasury Strategies Inc., said the very imposition of negative rates can lead to concerns that affect borrowing rates.

The negative rate “says there's a lot of risk in the market,” said Carfang, pictured at left. “So the risk premium gets much bigger. While we'll see lower borrowing costs than normal, we won't see borrowing costs go negative. And the spread between borrowing costs and investment yields will widen in a circumstance like this.”

Baseby noted that many corporates in Europe have found their bank facilities contain interest rate floors. “The rate cannot go below a number that is positive,” he said. “The central bank's artificially low rate is not being passed through.

“The one opportunity is when borrowing facilities need to be renewed or are having other terms changed in them; the borrowers are using those opportunities to negotiate out the floors,” he added.

In the United States, as companies renew credit lines, some banks are now adding floors on interest rates into the agreements, said Craig Martin, executive director of the Corporate Treasurers Council at the Association for Financial Professionals (AFP). Interest-rate floors are also being added to swaps agreements, he said.

How to cope with negative rates.

Carfang said negative rates are another factor pushing treasurers to improve cash forecasting, including forecasting their cash by jurisdiction. “Then with those numbers, you move the money around to give you the optimum return,” he said.

“The better your forecast, the further out you can invest your cash,” he said. “There's no country that has negative rates all the way out to the long term.”

Multinational treasuries tend to operate treasury centers and are able to sweep cash from the accounts of their local business units to the treasury center, allowing them to move excess funds to a country where they can get positive rates, said Tom Deas, a vice president at FMC and former chairman of both the National Association of Corporate Treasurers and the International Group of Treasury Associations. Large companies also have the ability to handle the foreign exchange issues involved, he said.

For treasurers of multinationals, negative rates increase the importance of the mobility of cash and “just-in-time funding policies,” so that cash can be swept to a country where it can be invested at a positive, rather than a negative, rate, Deas said. “It would be a big disadvantage if there were cash in a country that had negative rates and a borrowing need in a country with positive rates—you'd bear the worst of both worlds.”

But the ACT's Baseby cited foreign exchange exposures “and, in the case of the EU, the quite burdensome reporting requirements” related to using derivatives as obstacles to sweeping cash from one currency to another, and predicted that treasurers “will tend to stay in their natural currency.

“What they are doing is looking at alternative means of depositing cash,” he said. “Some are looking at the repo market, which at times offers an enhanced yield.”

Treasurers are also investing directly in short-term corporate paper and making more use of separately managed accounts through asset managers operating in Europe, said AFP's Martin. Companies can also look at natural offsets, he said, such as using the cash they have in countries with negative rates to make acquisitions or invest in the business.

Carfang said treasurers also need to stress test, keeping in mind that their experience in moving from, say, an 8% rate down to 4% might not be relevant when interest rates are extremely low or negative.

“If you really did get charged negative rates, you might actually change your behaviors in some radical ways,” he added. “If a bank was really going to charge you 25 basis points to hold your money, rather than have the bank charge you, [you might] pay all your bills or pay some of your suppliers in advance and let them hold the cash. That may be your best investment option.”