The midfielder was handed the armband after signing for the Black Cats ahead of their return to the Premier League and was honoured to be thought of in such high esteem.
Xhaka told FourFourTwo magazine: "The club offered me the armband before the start of the season. I said yes, just as long as it didn't create any problems in the dressing room.
"It looks nice, but you don't need it. A real leader has the power without the armband.
"However, I'm very proud the club made that decision, and I want to use my experience to be an example for my team-mates and myself."
The Swiss international continued: "We have a strong leadership group. It did make it easier for me coming in when I knew players from before. I knew Dan Ballard from Arsenal and Nordi Mukiele from Leverkusen. When you have experienced players who are close to you, it becomes much easier.
"Even the youngsters, and those who have been at Sunderland longer than myself, they always help you learn about the club."
Sunderland have made an impressive return to the top-flight so far as they sit in the top half of the table but Xhaka insists that the players aren't concerned about their league position.
He said: "Nobody in the dressing room speaks about the table.
"We have a completely new team, and even with the players who were here last season, we've all become close very fast.
"It's day by day. If you come and see us from Monday to matchday, we demand everything from each other. In the end, you need a little bit of luck, but you need to deserve it.
"I've called on the whole building, not just the players, to work towards success together."