diff --git a/edb/server/protocol/pg_ext.pyx b/edb/server/protocol/pg_ext.pyx
index 33297da7a19..805d89a9086 100644
--- a/edb/server/protocol/pg_ext.pyx
+++ b/edb/server/protocol/pg_ext.pyx
@@ -1501,7 +1501,7 @@ cdef class PgConnection(frontend.FrontendConnection):
         if self.debug:
             self.debug_print("Compile", query_str)
         fe_settings = dbv.current_fe_settings()
-        key = (hashlib.sha1(query_str.encode("utf-8")).digest(), fe_settings)
+        key = compute_cache_key(query_str, fe_settings)
 
         ignore_cache |= self._disable_cache
 
@@ -1584,6 +1584,17 @@ cdef class PgConnection(frontend.FrontendConnection):
         return qu
 
 
+def compute_cache_key(
+    query_str: str, fe_settings: dbstate.SQLSettings
+) -> bytes:
+    h = hashlib.blake2b(query_str.encode("utf-8"))
+    for key, value in fe_settings.items():
+        if key.startswith('global '):
+            continue
+        h.update(hash(value).to_bytes(8, signed=True))
+    return h.digest()
+
+
 cdef WriteBuffer remap_arguments(
     data: bytes,
     params: list[dbstate.SQLParam] | None,
diff --git a/edb/testbase/server.py b/edb/testbase/server.py
index 32e66d13b5c..051fbe1259a 100644
--- a/edb/testbase/server.py
+++ b/edb/testbase/server.py
@@ -2269,6 +2269,18 @@ async def connect(self, **kwargs: Any) -> tconn.Connection:
         conn_args = self.get_connect_args(**kwargs)
         return await tconn.async_connect_test_client(**conn_args)
 
+    async def connect_pg(self, **kwargs: Any) -> asyncpg.Connection:
+        import asyncpg
+
+        conn_args = self.get_connect_args(**kwargs)
+        return await asyncpg.connect(
+            host=conn_args['host'],
+            port=conn_args['port'],
+            user=conn_args['user'],
+            password=conn_args['password'],
+            ssl='require'
+        )
+
     async def connect_test_protocol(self, **kwargs):
         conn_args = self.get_connect_args(**kwargs)
         conn = await test_protocol.new_connection(**conn_args)
diff --git a/tests/test_server_ops.py b/tests/test_server_ops.py
index 9d4aaf542d9..843f70f0507 100644
--- a/tests/test_server_ops.py
+++ b/tests/test_server_ops.py
@@ -727,6 +727,14 @@ def measure_compilations(
                 '{tenant="localtest",path="compiler"}'
             ) or 0
 
+        def measure_sql_compilations(
+            sd: tb._EdgeDBServerData
+        ) -> Callable[[], float | int]:
+            return lambda: tb.parse_metrics(sd.fetch_metrics()).get(
+                'edgedb_server_sql_compilations_total'
+                '{tenant="localtest"}'
+            ) or 0
+
         with tempfile.TemporaryDirectory() as temp_dir:
             async with tb.start_edgedb_server(
                 data_dir=temp_dir,
@@ -822,6 +830,42 @@ def measure_compilations(
                 finally:
                     await con.aclose()
 
+                has_asyncpg = True
+                try:
+                    import asyncpg  # noqa
+                except ImportError:
+                    has_asyncpg = False
+
+                if has_asyncpg:
+                    scon = await sd.connect_pg()
+                    try:
+                        with self.assertChange(measure_sql_compilations(sd), 1):
+                            await scon.fetch('select 1')
+
+                        with self.assertChange(measure_sql_compilations(sd), 1):
+                            await scon.fetch('select 1 + 1')
+
+                        # cache hit
+                        with self.assertChange(measure_sql_compilations(sd), 0):
+                            await scon.fetch('select 1')
+
+                        # TODO: normalization & constant extraction
+                        with self.assertChange(measure_sql_compilations(sd), 2):
+                            await scon.fetch('select 2')
+                            await scon.fetch('sELEcT  1')
+
+                        # cache hit, even after global has been changed
+                        await scon.execute('SET "global default::g" to 1')
+                        with self.assertChange(measure_sql_compilations(sd), 0):
+                            await scon.execute('select 1')
+
+                        # compiler call, because config was changed
+                        await scon.execute('SET apply_access_policies_sql to 1')
+                        with self.assertChange(measure_sql_compilations(sd), 1):
+                            await scon.execute('select 1')
+                    finally:
+                        await scon.close()
+
             # Now restart the server to test the cache persistence.
             async with tb.start_edgedb_server(
                 data_dir=temp_dir,