The iShares MSCI France Index Fund (NYSEArca: EWQ) was gyrating around unchanged in U.S. trade after Moody’s Investor Services said it was downgrading long-term debt ratings of two large French banks because of their holdings of Greek debt.

Moody’s said it was downgrading Credit Agricole SA’s long-term rating to “Aa2” and cut Societe Generale SA’s long-term ratings to “Aa3,” according to information posted on its website. A report in the Wall Street Journal suggested that the ratings agency didn’t go as far as some had expected. Indeed, it left unchanged BNP Paribas SA’s long-term rating at “Aa2,” but maintained its review of that bank.

The ETF, closely tracking France’s broad stock index, the CAC 40, rose 67 cents, or almost 3.48 percent, to $19.55 a share Wednesday on Arca, the New York Stock Exchange’s electronic trading platform. In the immediate aftermath of the downgrades, EWQ edged lower, also tracking the CAC 40. The French stock index closed 1.87 percent higher.

While the French government has said it would do whatever was necessary to support its major banks, the fate of financial institutions in the world’s No. 5 economy has come to represent the fresh havoc that could befall the global economy should Greece or other European nations default on their debt. Indeed, it appears the stakes couldn’t be higher.

New Systemic Threat?

Many analysts and traders say the possible collapse of a big French bank poses as much—if not more—of a threat to global economic stability than the collapse of Lehman Brothers in September 2008. Lehman’s collapse is widely seen as the event that caused an unraveling of global credit markets and the true beginning of what became the worst economic downturn since the 1930s.

The collapse of Lehman brought to a head a process that arguably began in June 2007 with the collapse of two hedge funds at the now-defunct Bear Stearns. The two funds were brought down because of large portfolios of mortgage-related collateralized debt obligations.

Bear Stearns itself went down in March 2008 in an emergency takeover by J.P. Morgan Chase backed by the Federal Reserve—a shocking event in itself that ended up being a prelude to the failure of several other important U.S. financial institutions including Lehman, the insurance company AIG and Fannie Mae.

Financials represent just over 15 percent of the iShares France ETF’s holdings, with BNP the No. 3 holding, at about 5 percent of the portfolio.

EWQ has more than $302 million in assets, according to data compiled by IndexUniverse. iShares brought it to market in March 1996.