Ron Peterson <rpeterso@mtholyoke.edu> writes:
> So it seems like the single quotes are causing :v_encoding to be read as
> a string literal for ENCODING, but they don't do that for WITH PASSWORD.
Yeah, they behave the same in both cases. If you'd experimented you
would have found that the password was set to ":v_dbpass", presumably
not what you wanted, but it's OK as far as CREATE USER knows.
regards, tom lane