The Monetary Authority of Singapore said on Thursday that it will embark on a pilot program with the People's Bank of China, the country's central bank, to allow tourists from both countries to use the digital renminbi, or e-CNY, for spending during their travels in Singapore and China.

Experts said the move points to closer financial cooperation between the two countries, and marks a milestone in the development of e-CNY and the internationalization of the renminbi.

The pilot program is one of the new digital finance and capital markets initiatives that Singapore will take to expand its financial cooperation with China, and can help build a more convenient shopping experience for tourists during overseas travel.

Singapore has become the first sovereign state to announce such an initiative, following the signing of a memorandum of understanding on digital finance cooperation in 2020 between the Monetary Authority of Singapore and the Digital Currency Institute of the PBOC.

"The initiative will allow e-CNY to be used for cross-border payments and settlements in more scenarios, contributing to the promotion of e-CNY, and the internationalization of the renminbi in the long run," said Zhou Maohua, a macroeconomic researcher at China Everbright Bank.

"The e-CNY has gone through years of innovations and trials, and the relevant technologies have become mature enough. This cooperation will not only bring more convenience to international tourists but also give full play to the e-CNY's advantages of being more secure, convenient, and efficient."

The convenience of digital renminbi in payments and settlements can help prevent risks caused by the fluctuation of exchange rates to some extent, he added.

Dong Ximiao, chief researcher at Merchants Union Consumer Finance, said the e-CNY cooperation pilot between the two countries — reflecting China's commitment to high-standard financial opening-up — will also help attract more economies to strengthen cooperation with China in financial areas.

"The cooperation between China and Singapore, a sovereign state to pilot cross-border payments and settlements of e-CNY, is a big breakthrough, which will expand application scenarios of digital renminbi and improve its international profile," said Dong.

"If the pilot work progresses well, we could accumulate experience and expand the global reach of digital renminbi, for instance, to economies taking part in the Belt and Road Initiative, and make better use of e-CNY in cross-border transactions to serve more people."

The initiative can also help boost the tourism markets of China and Singapore and further drive prosperity in their retail, financial, and other services sectors, although trade expansion relies mostly on an economy's growing position in the global industrial and supply chains, he added.