Xavi said Ousmane Dembele could become the "best player in the world in his position" after Barcelona president Joan Laporta suggested the forward is better than Kylian Mbappe.
Dembele, who signed from Borussia Dortmund in 2017, is out of contract at the end of the season and has been linked with a move away from Camp Nou in January.
The France international will be free to discuss fresh terms with clubs next month if a new contract cannot be agreed with Barca.
Laporta revealed on Thursday that negotiations were going slower than expected with Dembele but assured the following day that the 24-year-old wanted to stay and told TV3 he believes the Barca forward was better than Mbappe.
"We have a very good relationship with Dembele and he wants to stay," Laporta said.
"We also want him to stay because he's a great player. These situations need negotiations with representatives who want the best for the player.
"I'm enthusiastic about Dembele. He's a better player than Mbappe."
Asked for an update on the Dembele situation, Xavi told reporters: "What I know is that it is not only the economic issue.
"We have left him a very clear position. He is a very important player with great talent. I already said it, he can be the best player in the world in his position. It depends on him.
"We think of him as a key figure in this project. If it is because of the sporting project, he is happy. We are going to be positive. It is not just an economic issue. He wanted to feel loved and this he will have."
Questions were then put as to whether Dembele would feature without signing a contract and Xavi responded: "It would not be the objective, if he has a contract I think he has to play.
"You have to be positive. But on the other hand, I am very clear on that, if you have a contract you have to play, also because of the image of the club. I do not value that option; I do not contemplate it."
13 points off leaders Real Madrid
Club icon Xavi took the reins after Ronald Koeman's dismissal in late October and has triumphed in his opening two LaLiga games – only four Barca managers have ever won their first three in the competition in the 21st century.
The Catalan club sit seventh, 13 points off leaders Real Madrid ahead of facing Betis, who have won just one of 20 previous top-flight meetings with Barca.
Xavi's side then face Bayern Munich on Wednesday in a crucial Champions League clash that they are likely to have to win to qualify for the knockout stages, but the former midfielder said his focus was on Betis.
"I look no further," Xavi responded when asked about the week ahead. "Each game is vital. Tomorrow is also a final. We cannot lose points if we want to connect and fight for the league.
"We will play with the best 11, with whom I think they can perform better due to the circumstances. The league will tell us where we are at the end of the season.
"It is an important week like the next one will also be. And in January. Barca is a daily requirement and every game.
"Every week at Barca is vital. There is no rest until the holidays... we can't give anything away.
"Barca aspire to win everything and time will always tell where we got to. We are a team made to win, to compete."