The 51-year-old has voiced his opinion that the Spanish duo have done enough to win the individual award over Cristiano Ronaldo and Lionel Messi due to their exploits at Euro 2012
The latter two are by many seen as the favourites to win the prestigious individual award following their impressive goalscoring exploits in 2012.
However, Matthaus believes neither of the two has done enough with their respective national sides to deserve the award.
"In my opinion there are currently several exceptional footballers who could justifiably win the title, but I think a Spaniard should win the Fifa Ballon d'Or," Matthaus told the Fifa website.
"My favourites are Xavi and Iniesta. Maybe they don’t stand out as much as Ronaldo and Messi because they don’t score as often, but they’ve won one trophy after another for club and country.
"They’re the heartbeat in both teams [Barcelona and Spain] and are always pulling the strings on the pitch, as they impressively demonstrated at Euro 2012.
"Of course, last year Lionel Messi and Cristiano Ronaldo amazed us all with their clubs, setting unbelievable records with the amount of goals they scored. However, they couldn’t repeat that kind of form at international level."
Argentina attacker Messi won the last Ballon d'Or, ahead of Real Madrid's Ronaldo and Blaugrana vice-captain Xavi.