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Where can I change the setting so that when mysql loads up with the xampp basic start, a default character set other than latin1 is used?

Preferably, a method that does not require running mysql as a service.

Please help!
Thanks!

Where can I change the setting so that when mysql loads up with the xampp basic start

It's the same like running MySQL as a service. Edit the option file:
\xampp\mysql\bin\my.cnf

Thanks!! It's working perfectly now