diff --git a/odoo/service/db.py b/odoo/service/db.py
index 063d8eaee7d..6bac41282de 100644
--- a/odoo/service/db.py
+++ b/odoo/service/db.py
@@ -97,7 +97,13 @@ def _create_empty_database(name):
             raise DatabaseExists("database %r already exists!" % (name,))
         else:
             cr.autocommit(True)     # avoid transaction block
-            cr.execute("""CREATE DATABASE "%s" ENCODING 'unicode' LC_COLLATE 'C' TEMPLATE "%s" """ % (name, chosen_template))
+
+            # 'C' collate is only safe with template0, but provides more useful indexes
+            collate = "LC_COLLATE 'C'" if chosen_template == 'template0' else ""
+            cr.execute(
+                """CREATE DATABASE "%s" ENCODING 'unicode' %s TEMPLATE "%s" """ %
+                (name, collate, chosen_template)
+            )
 
 @check_db_management_enabled
 def exp_create_database(db_name, demo, lang, user_password='admin', login='admin', country_code=None):
diff --git a/odoo/tools/config.py b/odoo/tools/config.py
index 7fa33f400fd..1a026486bbb 100644
--- a/odoo/tools/config.py
+++ b/odoo/tools/config.py
@@ -221,7 +221,7 @@ class configmanager(object):
                          help="specify the database ssl connection mode (see PostgreSQL documentation)")
         group.add_option("--db_maxconn", dest="db_maxconn", type='int', my_default=64,
                          help="specify the the maximum number of physical connections to PostgreSQL")
-        group.add_option("--db-template", dest="db_template", my_default="template1",
+        group.add_option("--db-template", dest="db_template", my_default="template0",
                          help="specify a custom database template to create a new database")
         parser.add_option_group(group)