I'm running QGIS 2.1.4 and Windows 7. For each layer, under properties there is a drop down box called 'data source encoding'. Mine is set to 'system'. I am wondering what this means, there seems to be a lot of options one can choose from.
In most cases, you can leave it to
If you read data from OpenStreetMap, it will be encoded
UTF-8. So if you experience strange characters in parts of the world where the latin alphabet is used with umlauts or accents, keep an eye on the encoding.
The same might happen with cyrillic, chinese or japanese data. These might be set to other encodings than utf-8.