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The task of image registration is fundamental in image processing. It often is a critical preprocessing step to many modern image processing and computer vision tasks, and many algorithms and techniques have been proposed to address the registration problem. Often, the performances of these techniques have been presented using a variety of relative measures comparing different estimators, leaving open the critical question of overall optimality. In this paper, we present the fundamental performance limits for the problem of image registration as derived from the Cramer-Rao inequality. We compare the experimental performance of several popular methods with respect to this performance bound, and explain the fundamental tradeoff between variance and bias inherent to the problem of image registration. In particular, we derive and explore the bias of the popular gradient-based estimator showing how widely used multiscale methods for improving performance can be explained with this bias expression. Finally, we present experimental simulations showing the general rule-of-thumb performance limits for gradient-based image registration techniques.