The Kuna is the currency of Croatia. Find the web site of Croatia's central bank, and determine the exchange rate system Croatia runs? Suppose the Kuna weakens substantially relative to the euro

Which action can the central bank take to keep its currency system functioning properly?

The web site of Croatia's central bank, called the Croatian National Bank, is at http://www.hnb.hr/eindex.htm. Under the Tab entitled Exchange Rate List, there is another Tab entitled About the Exchange Rate. Here is what was written on June 2, 2011:

HOW IS THE KUNA EXCHANGE RATE SET?
Croatia implements the exchange rate regime of managed floating, where the exchange rate of the domestic currency is not fixed against another foreign currency or basket of currencies, but is rather freely determined by the foreign exchange market. The exchange rate thus floats depending on the foreign exchange supply and demand on the foreign exchange market. However, the Croatian National Bank prevents too excessive exchange rate fluctuations by occasional market interventions in an attempt to maintain relative stability of the exchange rate.

Hence, if the currency weakens substantially, the central bank can intervene directly on the foreign exchange market. It may also increase the domestic interest rate.