Creating user with encrypted password in PostgreSQL

You may provide the password already hashed with md5, as said in the doc (CREATE ROLE):

ENCRYPTED UNENCRYPTED These key words control whether the password is stored encrypted in the system catalogs. (If neither is specified, the default behavior is determined by the configuration parameter password_encryption.) If the presented password string is already in MD5-encrypted format, then it is stored encrypted as-is, regardless of whether ENCRYPTED or UNENCRYPTED is specified (since the system cannot decrypt the specified encrypted password string). This allows reloading of encrypted passwords during dump/restore.

The information that's missing here is that the MD5-encrypted string should be the password concatened with the username, plus md5 at the beginning.

So for example to create u0 with the password foobar, knowing that md5('foobaru0') is ac4bbe016b808c3c0b816981f240dcae:

CREATE USER u0 PASSWORD 'md5ac4bbe016b808c3c0b816981f240dcae';

and then u0 will be able to log in by typing foobar as the password.

I don't think that there's currently a way to use SHA-256 instead of md5 for PostgreSQL passwords.

I'm not aware of a way to override the default md5 encryption of passwords, but if you have a ROLE (aka "USER") that has an already md5-encrypted password it appears that you can supply that. Verify this using pg_dumpall -g (to see the globals from the cluster) Eg.

psql postgres
create role foo with encrypted password foobar;
\q

-- View the role from pg_dumpall -g
pg_dumpall -g | grep foo
CREATE ROLE foo;
ALTER ROLE foo WITH NOSUPERUSER INHERIT NOCREATEROLE NOCREATEDB NOLOGIN NOREPLICATION PASSWORD 'md5c98cbfeb6a347a47eb8e96cfb4c4b890';

Or get it from:
select * from pg_catalog.pg_shadow;

-- create the role again with the already-encrypted password
psql postgres
drop role foo;
CREATE ROLE foo;
ALTER ROLE foo WITH NOSUPERUSER INHERIT NOCREATEROLE NOCREATEDB NOLOGIN NOREPLICATION PASSWORD 'md5c98cbfeb6a347a47eb8e96cfb4c4b890';
\q

-- view the ROLE with the same password
pg_dumpall -g | grep foo
CREATE ROLE foo;
ALTER ROLE foo WITH NOSUPERUSER INHERIT NOCREATEROLE NOCREATEDB NOLOGIN NOREPLICATION PASSWORD 'md5c98cbfeb6a347a47eb8e96cfb4c4b890';

Docs for CREATE ROLE