The Federal Reserve managed to avoid turning to negative interest rates through the pandemic-induced recession of 2020. But if the economy faces another downturn, will the central bank be backed into short-term borrowing rates below zero?

In a UBS survey of almost 30 central banks around the world, 21% of respondents said they could see the Fed turning to negative interest rates if needed.

The concern: With U.S. short-term rates yet again backed up at near-zero, a Fed that may be slower to raise interest rates will not have the room to again cut rates in the next crisis.

But Fed officials, who managed to avoid the tool through an economic shutdown of unprecedented scale, have made it clear that negative interest rates are low on their lists of preferred policy tools.

“Negative rates I think have a worse cost-benefit relationship than the other tools that we have,” New York Fed President John Williams told reporters on Monday morning.

An October 2019 discussion of negative rates noted that all of the Fed’s policy-setting members disliked the idea of implementing the policy in the U.S.

“The committee’s view on negative rates really has not changed. This is not something we’re looking at,” Powell said in May 2020.

Still, the central bank hasn’t explicitly ruled out its possible use in the future.

‘Rather stay out of that game’

Negative interest rate policies, such as those deployed by the European Central Bank and the Bank of Japan, attempt to stimulate the economy by penalizing banks for parking money at the central bank. The idea is to push banks to lend into the economy by further discouraging saving.

But Fed officials have worried about the distortions that could come with negative short-term rates in the U.S., where the importance of U.S. government debt markets and the U.S. dollar could have wide-reaching and international financial stability consequences.

“You’ve got Japan and Europe mired in negative interest rates,” St. Louis Fed President James Bullard told Yahoo Finance on May 24. “We’d rather stay out of that game.”

UBS noted that the $4.5 trillion money market, which is heavily reliant on short-term rates, is too large — and too interconnected to public and private sectors — to be toyed around with.

“Implementing a negative interest rate policy in the U.S. would be too much of a disruptor (not the same issue overseas),” UBS Chief Investment Officer Solita Marcelli wrote.

The playbook in the next crisis might therefore look similar to the one used last year: near-zero rates, aggressive asset purchases, and an armada of liquidity facilities to backstop various financial markets.